The present study reports on a thermogelling poly(ethylene glycol)-poly(l-alanine-co-l-phenyl alanine) grafted chitosan (CS-g-(PAF-PEG)) system, focusing on phase diagram, transition mechanism, and in vivo gel duration. The sol-to-gel transition temperature decreased from 27 to 11 °C as the concentration increased from 4.0 wt % to 9.0 wt %. The polymer formed micelles with 10-50 nm in diameter at 10 °C and formed large aggregates ranging from hundreds to thousands of nanometers in size as the temperature increased from 10 to 35 °C, suggesting that an extensive molecular aggregation might be involved in the sol-to-gel transition. To study the transition mechanism on a molecular level, we investigated pH, circular dichroism spectra, and 13C NMR spectra of the CS-g-(PAF-PEG) aqueous solution as a function of temperature. As the temperature increased, deprotonation of the chitosan and dehydration of the PEG were suggested, whereas the α-helical secondary structure of PAF was slightly changed in the sol-to-gel transition temperature range of 10-50 °C. A gel was formed in situ after injecting the CS-g-(PAF-PEG) aqueous solution into the subcutaneous layer of rats. About 60-70% of the gel was eliminated in 1 week, and the remaining gel was completely cleared from the implant site in 14 days. The results indicate the potential of CS-g-(PAF-PEG) as a promising short-term carrier for pharmaceutical agents.