PEG-grafted chitosan was formulated such that its solution undergoes a thermally reversed phase transition from an injectable free-flowing solution at low temperature to a gel at body temperature. Aqueous solutions of PEG-grafted chitosan can be prepared at physiological pH values, thereby allowing safe incorporation of bioactive molecules. This injectable thermoreversible hydrogel is potentially suitable for a wide range of biomedical applications, particularly in sustained in vivo drug release and tissue engineering. An aqueous solution of PEG-grafted chitosan polymer is injectable at low temperatures but forms a gel at body temperature.