The aim of the present study was to increase the solubility of an anti-allergic drug loratadine by making its inclusion complex with β-cyclodextrin and to develop it’s thermally triggered mucoadhesive in situ nasal gel so as to overcome first-pass effect and consequently enhance its bioavailability. A total of eight formulations were prepared by cold method and optimized by 2 3 full factorial design. Independent variables (concentration of poloxamer 407, concentration of carbopol 934 P, and pure drug or its inclusion complex) were optimized in order to achieve desired gelling temperature with sufficient mucoadhesive strength and maximum permeation across experimental nasal membrane. The design was validated by extra design checkpoint formulation (F9) and Pareto charts were used to help eliminate terms that did not have a statistically significant effect. The response surface plots and possible interactions between independent variables were analyzed using Design Expert Software 8.0.2 (Stat Ease, Inc., USA). Faster drug permeation with zero-order kinetics and target flux was achieved with formulation containing drug: β-cyclodextrin complex rather than those made with free drug. The optimized formulation (F8) with a gelling temperature of 28.6 ± 0.47°C and highest mucoadhesive strength of 7,676.0 ± 0.97 dyn/cm 2 displayed 97.74 ± 0.87% cumulative drug permeation at 6 h. It was stable for over 3 months and histological examination revealed no remarkable damage to the nasal tissue.