Considering limitations of conventional insulin therapies, the present study characterizes usefulness of novel mucoadhesive multivesicular liposomes as a mucoadhesive sustained release carrier of insulin via nasal and ocular routes, thus attempts to develop non-invasive carrier system for the controlled release of bioactives. Multivesicular liposomes (MVLs) of 26-34 microm were prepared with a high protein loading (58-62%) and were coated with chitosan and carbopol. These mucoadhesive carriers were characterized by zeta potential studies, in vitro mucoadhesion test and insulin protective ability against nasal aminopeptidase. In vitro, mucoadhesive carriers released insulin for a period of 7-9 days compared to 24 h of conventional liposomes. After intranasal administration to STZ induced diabetic rats, the mucoadhesive MVLs (chitosan coated MVLs) effectively reduced plasma glucose level up to 2 days (35% reduction), compared to non-coated MVLs (32% at 12 h) and conventional liposomes (34% at 8 h). Although the differences are statistically insignificant, chitosan coated formulation has shown a better hypoglycemic profile as the effects were prolonged compared to carbopol coated formulation. When compared to ocular route, chitosan formulation after nasal administration has shown better therapeutic profile as the hypoglycemic effects were prolonged until 72 h. The effectiveness of this chitosan coated MVLs was further demonstrated by the significant quantities of ELISA detectable insulin levels after nasal (334.6 microIu/ml) and ocular (186.3 microIu/ml) administration. These results demonstrate that mucoadhesive carrier is a viable option for a sustained release transmucosal insulin carrier, and open an avenue to develop a non-invasive carrier platform for the controlled release of bioactives.