Purpose: The objective of this study was to develop and characterize polymeric nanoparticles of appropriate stereoisomeric dipeptide prodrugs of acyclovir (L-valine-L-valine-ACV, L-valine-D-valine-ACV, D-valine-L-valine-ACV, and D-valine-D-valine-ACV) for the treatment of ocular herpes keratitis. Methods: Stereoisomeric dipeptide prodrugs of acyclovir (ACV) were screened for bioreversion in various ocular tissues, cell proliferation, and uptake across the rabbit primary corneal epithelial cell line. Docking studies were carried out to examine the affinity of prodrugs to the peptide transporter protein. Prodrugs with optimum characteristics were selected for the preparation of nanoparticles using various grades of poly (lactic-co-glycolic acid) (PLGA). Nanoparticles were characterized for the entrapment efficiency, surface morphology, size distribution, and in vitro release. Further, the effect of thermosensitive gels on the release of prodrugs from nanoparticles was also studied. Results: L-valine-L-valine-ACV and L-valine-D-valine-ACV were considered to be optimum in terms of enzymatic stability, uptake, and cytotoxicity. Docking results indicated that L-valine in the terminal position increases the affinity of the prodrugs to the peptide transporter protein. Entrapment efficiency values of L-valine-L-valine-ACV and L-valine-D-valine-ACV were found to be optimal with PLGA 75:25 and PLGA 65:35 polymers, respectively. In vitro release of prodrugs from nanoparticles exhibited a biphasic release behavior with initial burst phase followed by sustained release. Dispersion of nanoparticles in thermosensitive gels completely eliminated the burst release phase. Conclusion: Novel nanoparticulate systems of dipeptide prodrugs of ACV suspended in thermosensitive gels may provide sustained delivery after topical administration. © 2011, Mary Ann Liebert, Inc.