Aphthous stomatitis is a common inflammatory oral disease with challenging management. Crocin is a natural carotenoid that has shown great anti-inflammatory properties. The aim of this study was to develop thiolated chitosan (TCS)-based hydrogels containing niosomes to serve as a mucoadhesive crocin delivery system for aphthous stomatitis. Crocin-loaded niosomes were prepared and the impact of surfactant type, cholesterol content, and lipid to drug ratio on the characteristics of niosomes was evaluated. TCS was synthesized and the success of thiolation was investigated. The optimum niosomal formulation was loaded into the hydrogel and the hybrid system was characterized regarding the morphology, mucoadhesive properties, viscosity, chemical structure, in vitro drug release, and in vivo efficacy. The optimized niosome formulation showed 77% crocin entrapment, a particle diameter of 59 nm, and a zeta potential of −18 mV. The niosome-containing hydrogel exhibited pseudoplastic rheological behavior, mucoadhesive properties, suitable swelling, and sustained release of crocin. In vivo study revealed that the niosome-containing hydrogel improved ulcer healing and decreased the expression of tumor necrosis factor-alpha (TNF-α) and p53 while increasing the expression of vascular endothelial growth factor (VEGF) and alpha-smooth muscle actin (α-SMA). Collectively, TCS hydrogel-embedded crocin-loaded niosomes is a promising therapeutic option for aphthous stomatitis. Chemical compounds studied in this articleCrocin (PubChem CID: 5281233)Chitosan (PubChem CID: 71853)Thioglycolic acid (PubChem CID: 1133)1-ethyl-3-(3-dimethylaminopropyl) carbodiimide hydrochloride (PubChem CID: 2723939)5,5′-dithiobis (2-nitrobenzoic acid) (PubChem CID: 6254)Cholesterol (PubChem CID: 5997)