Abstract Periodontitis is a chronic inflammatory disease of tooth support tissues leading to progressive destruction of periodontal soft tissues as well as alveolar bone, and can be treated with anti‐inflammatory and bone‐protective agents to prevent disease progression. Caffeic acid phenethyl ester (CAPE) is a natural polyphenolic compound with anti‐inflammation, anti‐oxidation and bone tissue repair efficacy. In this work, we synthesized a thermosensitive hydrogel matrix of acetylated carboxymethyl chitosan (A‐CC), and firstly applied for periodontal local drug delivery. The biocompatible CAPE‐loaded A‐CC hydrogel (CAPE‐A‐CC) has the advantages of forming a drug depot in situ, sustained release and precisely improving the drug concentration in the lesion sites compared with traditional systemic administration. In addition, CAPE‐A‐CC could significantly inhibit the expression of inflammatory cytokines of TNF‐α, IL‐1β, IL‐6, and IL‐17 in macrophages, and increased the expression of alkaline phosphatase (ALP) in human periodontal ligament stem cells (hPDLSC) related to osteogenesis. This study develops a novel in situ thermosensitive hydrogel delivery system to improve the therapeutic potential of natural active ingredient for periodontitis therapy.