Guggulu tiktaka gritham (GTG) is an ayurvedic formulation prepared using ghee (clarified butter). It is bitter with a disagreeable taste, and consuming high amounts as a single dose is a negative factor for oral administration. Nanoencapsulation of ayurvedic medicated ghee using a suitable water-soluble carrier is essential for absorption in the body as nanometer particles have a high surface area and can mask the bitterness. Its incorporation in a protein bar can reduce bitterness and enhance palatability. The oil-in-water emulsion technique was used to make GTG water-soluble, followed by ultrasonication to reduce particle size. The nanoemulsion prepared was spray-dried to obtain a powder and incorporated in the protein-rich pressed bar. Dynamic light scattering method and UV-VIS spectroscopy were used to ascertain particle size and confirm the stability of GTG after nanoencapsulation. The sensory profile of native GTG, nanoencapsulated GTG powder, and formulated protein bar were carried out. Nanoencapsulation of native GTG in a water-soluble carrier resulted in particle sizes averaging 397 nm. The addition of emulsifiers and salt decreased the particle sizes to 240 nm. Nanoencapsulation did not alter the chemical nature of native GTG, as evidenced by the absorbance observed in the 322-325 nm range. The sensory analysis showed that the nanoencapsulated GTG-incorporated protein bar was liked by 90% of the population. The challenges/bitterness related to oral administration of ayurvedic GTG formulation were alleviated by incorporating nanoencapsulated GTG into a protein bar, improving its palatability.