Ciprofloxacin (CIP) is an antibacterial agent prescribed for the treatment of ocular infections. The objective of the present project is to investigate the effect of surface PEG functionalization of the Nano structured lipid carriers (NLCs) on formulation stability, ocular penetration and distribution. CIP NLCs were tested with different molecular weight (poly ethylene glycol) PEGs ranging from (2 K to 20 K) grafted onto the phospholipid and with different chain lengths (14–18 carbons) of phospholipids derivatized with PEG–2K. Drug load in the formulations was maintained at 0.3%w/v. Formulations prepared were evaluated with respect to in vitro release, transcorneal permeation, autoclavability, morphological characteristics and in vivo ocular tissue distribution. Scanning Transmission electron microscopy (STEM) studies revealed that the PEG-CIP-NLCs were spherical in shape. Transcorneal penetration of CIP was optimum with PEG molecular weight in between 2 K–10 K. Carbon chain length of the phospholipid, however, did not affect transcorneal penetration of CIP. In vivo ocular tissue CIP concentrations attained from the various formulations was consistent with the in vitro data obtained. The results suggest that surface functionalization of PEGs, within a specified range of molecular weight and surface packing density, significantly enhance trans-ocular penetration and impart sterilization-stabilization characteristics into the formulations.