In situ gelling thermosensitive hydrogel formulation has been reported to effectively sustain the release of macromolecules for a long time. However, the low-molecular-weight hydrophilic drugs, such as doxorubicin (DOX), are not suitable for intratumoral injection because the release will complete within one day. In this study, liposomal doxorubicin (LipDOX) was added into the hydrogel to form a novel thermosensitive formulation which prolonged the sustained release of DOX. DOX + C/GP (doxorubicin in chitosan/β-glycerophosphate) was prepared to compare with LipDOX + C/GP (liposomal doxorubicin in chitosan/β-glycerophosphate hydrogel). The particle size of DOX-loaded liposome was 94.2 nm and the encapsulation efficiency of DOX was near 98%. In vitro release experiments, the release of DOX in both DOX + C/GP group and LipDOX + C/GP group increased along with the increasing pH of buffers. However, the LipDOX + C/GP group with lower initial burst release had a much longer releasing duration than DOX + C/GP group (21 days vs. 24 h). In vitro and in vivo antitumor experiments demonstrated that LipDOX + C/GP group had better antineoplastic effect and less toxicity than DOX + C/GP group. Pharmacokinetics study showed LipDOX + C/GP exhibited a higher AUC0-t and longer MRT than DOX + C/GP in blood and tumor, which indicated that LipDOX + C/GP obtained an enhanced antitumor activity compared with DOX + C/GP. In addition, the lower distribution index (the ratio of AUC of normal tissue/AUC of tumor tissue) of the LipDOX + C/GP implied it had lower toxicity to normal tissues than DOX + C/GP. Therefore, the novel thermosensitive hydrogel formulation was potential for clinical application in cancer treatment.