Diabetic retinopathy (DR) is one of the chronic complications of diabetes. It includes retinal blood vessels' damage. If untreated, it leads to loss of vision. The existing treatment strategies for DR are expensive, invasive, and need expertise during administration. Hence, there is a need to develop a non-invasive topical formulation that can penetrate deep to the posterior segment of retina and treat the damaged retinal vessels. In addition, it should also provide sustained release. In recent years, novel drug delivery systems (NDDS) have been explored for treating DR and found successful. In this study, chitosan (CS) modified 5-Fluorouracil Nanostructured Lipid Carriers (CS-5-FU-NLCs) were prepared by modified melt emulsification-ultrasonication method and optimized by Box-Behnken Design. The size, polydispersity index, zeta potential and entrapment efficiency of CS-5-FU-NLCs were 163.2 ± 2.3 nm, 0.28 ± 1.52, 21.4 ± 0.5 mV and 85.0 ± 0.2 %, respectively. The in vitro drug release and ex vivo permeation study confirmed higher and sustained drug release in CS-5-FU-NLCs as compared to 5-FU solution. HET-CAM Model ensured the non-irritant nature of CS-5-FU-NLCs. In vivo ocular studies of CS-5-FU-NLCs confirmed antiangiogenic effect of 5-FU by CAM model and diabetic retinopathy induced rat model, indicating successful delivery of 5-FU to the retina.