Smart materials such as thermo‐sensitive in situ forming hydrogels can be effective agents in drug delivery and tissue regeneration with minimal invasion. Injection method would avoid complex surgical procedures facilitating rapid recovery process. In this research, we report the fabrication of an easy, reproducible thermo‐sensitive hydrogel constituting of chitosan (CHI), glycerol phosphate (GP) with variable quantity of ‐poly‐l‐lysine (PS). Fourier‐transform infrared spectra exhibited hydrogel formation where interactions between CHI and GP were seen. The gelation kinetics presented gelation time of 8 min at physiological temperature. The results indicated an increase in degradation rate with the passage of time. Contact angles measurements were employed to observe hydrophilic characteristics which were shown to be favorable. Mechanical strength was determined to be in the range of ~0.1–0.6 MPa for all the hydrogels. Due to intrinsic antibacterial features of CHI and PS, the hydrogels showed potent antibacterial activity against Escherichia coli, Staphylococcus aureus, and Methicillin‐resistant S. aureus (MR‐SA). Interestingly, PS's addition in the hydrogel resulted in potent antibacterial activity against clinically relevant MR‐SA. The hydrogels can hence be delivered to a specific target for localized treatments where the potential of inhibiting multidrug resistant strain is clinically relevant. Biocompatibility of the hydrogels was seen by an overall increase in cell viability of mouse fibroblast cells and scratch assay revealed favorable migration potential. Proangiogenic Vascular endothelial growth factor (VEGF)'s expression showed a gradual increase with increasing concentration of PS, whereas one composition demonstrated a slight increase in the expression of cytosolic prostaglandin E synthase (cPGES) as determined by RT‐PCR. Overall, an increase in PS content of the hydrogels resulted in simultaneously enhanced antibacterial efficiency and marked increase in fibroblast cell viability, hence, reiterating their potential as potent antibacterial agents that can be explored as wound healing agents. In conclusion, novel antibacterial thermo‐sensitive hydrogels were synthesized with a potential of regulating proangiogenic and tissue regeneration factors that highlight their role as wound healing agents.