Binding values in Dropdownlist in Gridview at runtime is not a big task.We can do it using RowDatabound event.In the given example dropdownlist is being populated at the time of editing.
At first declare a dropdownlist control in EditItemTemplate.
Write a Function to bind DropDownList.
Now the most important part the RowDataBound event. Here at first check for DataRow so that it will overlook HeaderRow and then check for EditIndex so that Databinding to DropDownList will be implemented to editble row only.