Niosomes has gained tremendous popularity as ultimate drug carrier. Lot of research work is being carried out on preparation of niosomes for ophthalmic use having no significant effect on vision and its sustained release pattern. Chloramphenicol niosomes were prepared using two different ratios of cholesterol, drug and surfactant, termed as EIN-1, EIN-2 by ether injection method and their entrapment efficiency, particle size. The in vitro drug release pattern was observed for ten hours. The EIN-2 showed 90% entrapment and released 81% of entrapped drug after 10 hours. Zeta potential & viscosity were determined and in-vivo comparison was made with Chloramphenicol eye drops where it exhibited Cmax of 15 μ g/ml. Stability studies were done to determine shelf life. MIC of selected strain of S. aureus was also determined. EIN 2 niosomal suspension was compared with Chloramphenicol eye drops in experimental conjunctivitis in albino rabbits. In-vitro studies are encouraging as niosomes released about 75% of total entrapped drug by EIN-1 and 81% of total entrapped drug by EIN 2. In vivo study shows that niosomes released the drug in eye in acceptable range and showed a sustained release pattern without affecting the vision. Niosomes were found ultimate ophthalmic drug carriers capable to release drug in sustained and determined pattern.