Fungal keratitis (FK) is a corneal infection caused by different fungal species. It is treated by the topical application of natamycin (NAT). Nevertheless, this approach faces many limitations like toxic effects, frequent dosing, resistance, and patient discomfort. The present research reports the development of trimethyl chitosan (TMC) coated mucoadhesive cationic niosomes by a modified thin-film hydration method. TMC was synthesized using a one-step carbodiimide method and characterized by 1 H-NMR and degree of quaternization (53.74 ± 1.06%). NAT, cholesterol (CHOL), span 60 (Sp60), and dicetyl phosphate (DCP) were used to prepare niosomes which were incubated with TMC to obtain mucoadhesive cationic NAT loaded niosomes (MCNNs). MCNNs showed a spherical shape with 1031.12 ± 14.18 nm size (PDI below 0.3) and 80.23 ± 5.28% entrapment efficiency. In vitro drug release studies showed gradual drug release from TMC coated niosomes as compared to the uncoated niosomes. MIC assay and disk diffusion assay revealed promising in vitro antifungal potential of MCNNs similar to the marketed formulation. For investigating in vivo performance, ocular retention and pharmacokinetics, ocular irritation, and ulcer healing studies were performed using the rabbit model. Mucoadhesive property and prolonged local drug release improved the safety and efficacy of NAT, suggesting that the developed niosomes could be an emerging system for effective treatment of fungal keratitis.