Abstract. Ofloxacin, available as ophthalmic solution, has two major problems: first, it needs frequent administration every 4 hours or even every 1 hour to treat severe eye infection; second, there is formation of white crystalline deposit on cornea due to its pH-dependent solubility, which is very low at pH of corneal fluid. In order to provide a solution to previous problems, ofloxacin in this study is prepared as topically effective in situ thermosensitive prolonged release liposomal hydrogel. Two preparation procedures were carried out, leading to the formation of multilamellar vesicles (MLVs) and reverse-phase evaporation vesicles (REVs) at pH 7.4. Effects of method of preparation, lipid content, and charge inducers on encapsulation efficiency were studied. For the preparation of in situ thermosensitive hydrogel, chitosan/β-glycerophosphate system was synthesized and used as carrier for ofloxacin liposomes. The effect of addition of liposomes on gelation temperature, gelation time, and rheological behaviors of the hydrogel were evaluated. In vitro transcorneal permeation was also determined. MLVs entrapped greater amount of ofloxacin than REVs liposomes at pH 7.4; drug loading was increased by including charge-inducing agent and by increasing cholesterol content until a certain limit. The gelation time was decreased by the addition of liposomes into the hydrogel. The prepared liposomal hydrogel enhances the transcorneal permeation sevenfold more than the aqueous solution. These results suggested that the in situ thermosensitive ofloxacin liposomal hydrogel ensures steady and prolonged transcorneal permeation, which improves the ocular bioavailability, minimizes the need for frequent administration, and decreases the ocular side effect of ofloxacin.