Environmentally responsive gel formulation for ocular controlled delivery of carteolol hydrochloride (HCl) was developed in an attempt to improve ocular bioavailability and hence decrease its systemic absorption and side effects. The viscosity and the ability of the prepared formulations to deliver carteolol HCl in vitro and in vivo were monitored and compared with an aqueous commercial solution. The effect of polymer concentration and drug concentration on the in vitro release of carteolol HCl was examined. Gelrite formulations showed pseudoplastic behavior with thixotropic characteristics and the viscosity of the prepared systems increased as the concentration of the polymer increased. At fixed drug concentrations, as the Gelrite concentration increased, the drug release decreased. At fixed polymer concentrations, as the drug concentration increased the release of drug increased. Gelrite formulation (0.4% w/w) containing 1% drug showed significantly improved bioavailability compared with the commercial aqueous solution (Arteoptic 1%). The developed in situ gel formulation showed potential for use as delivery systems with superior ocular bioavailability of carteolol HCl.