Smart hydrogels play an increasingly important role in biomedical applications, since materials that are both biocompatible and multi-stimuli-responsive are highly desirable. A simple, organic solvent-free method is presented to synthesize a biocompatible hydrogel that undergoes a sol-gel transition in response to multiple stimuli. Methoxy-poly(ethylene glycol) (mPEG) is modified into carboxylic-acid-terminated-methoxy-poly(ethylene glycol) (mPEG-acid), which is then grafted onto chitosan via amide linkages yielding mPEG-g-chitosan. Grafting of mPEG onto hydrophobic chitosan imparts hydrophilic properties to the resultant polymer. The mPEG-g-chitosan gel exhibits a controllable multi-stimuli-responsive property. The balance between hydrophilicity and hydrophobicity is believed to confer mPEG-g-chitosan with stimuli-responsive behavior. The effect of salt concentration, solute concentration, temperature, and pH on the sol-gel transition of mPEG-g-chitosan is evaluated and the underlying mechanisms of mPEG-g-chitosan polymer packing and gelation property is discussed.