The purpose of the present study was to develop febuxostat nanosuspension and investigate its effect on febuxostat solubility, dissolution rate and oral bioavailability. The wet media milling technique was adopted with a combination of hydroxypropyl methylcellulose (HPMC E3) and d-α-tocopherol polyethylene glycol 1000 succinate (TPGS) as surface stabilizers for the generation of nanocrystals. Rotatable central composite design (CCD) was selected for nanosuspension optimization. The critical parameters were bead volume, milling time, polymer and surfactant concentrations; whereas particle size, polydispersity index (PDI) and zeta potential were taken as responses. The presence of crystallinity was confirmed by differential scanning calorimetry and powder X-ray diffraction. Scanning electron microscopy and transmission electron microscopy revealed small and uniform plate like morphology. A significant increase was observed in saturation solubility and dissolution rate of the optimized nanosuspension in all the pH conditions tested. Oral bioavailability of FXT and optimized FNC was evaluated in SD rats. The nanosuspension exhibited enhanced Cmax (26.48 ± 2.71 vs. 19.85 ± 2.96 μg/mL) and AUC0−∞ (222.29 ± 9.81 vs. 100.32 ± 9.36 μg h/mL) with a 221.6% increase in relative bioavailability. Thus, FNC is a viable approach to enhance the bioavailability of FXT, a BCS Class II drug.