Niosomes have been reported as possible approach to improve the low corneal penetration and bioavailability characteristics for many drugs. The purpose of this study was to prepare and characterize an effective ocular niosomal hydrogel containing 0.5% (w/v) atenolol which is β1 adrenoceptor blocker for treatment of glaucoma. Thin film hydration method was used for the preparation of niosomes using Span 60 and cholesterol at different molar ratios. Niosomes were characterized using laser diffraction particle size analyzer, transmission electron microscopy, and differential scanning calorimetry. The results showed that higher entrapment efficiency (80.7%±1.2) was obtained from niosomes prepared using Span 60/cholesterol at a 2 : 1 molar ratio. Stability study revealed that a fairly high retention of atenolol inside vesicles (83.1%±2.35) up to a period of 3 months at 4°C. It was found that niosomal hydrogel formulation using carbopol 934P significantly exhibited sustained in vitro release of the drug compared with free drug solution and other polymeric hydrogels. The intraocular pressure (IOP) lowering activity of selected atenolol formulations was determined and compared with that of atenolol solution. It is worth noting that niosomal hydrogel formulation was found to show the most significant prolonged decrease in IOP, suggesting that niosomal hydrogel could be a promising delivery system for atenolol.