Poor bioavailability (<1%) of drugs from conventional eye drops is mainly due to the various precorneal loss factors which include rapid tear turnover, systemic drug absorption through naso-lachrymal duct, transient residence time of the drug solution in the cul-de-sac and the relative impermeability of the drugs to corneal epithelial membrane. The present study describes the formulation and evaluation of chitosan and gellan gum based novel in-situ gel system activated by dual physiological mechanisms. Chitosan (a pH-sensitive polymer) in combination with gellan gum (an ion-activated polymer) were used as gelling agent. Timolol maleate, the drug which is frequently used for glaucoma therapy was used as model drug to check the efficacy of the formulation. The developed formulation was characterized for various in vitro parameters, for example, clarity, gelation pH, isotonicity, sterility, viscosity, transcorneal permeation profile, and ocular irritation. Ocular retention was studied by gamma scintigraphy and a significant increase in retention time was observed. The formulation was also found to be nonirritant and well tolerable. The developed system can be a viable alternative to conventional eye drops for the treatment of various ocular diseases and is suitable for clinical application.