Adham has posted a fairly clear explanation. These expressions are quite different, and a speaker would never confuse them. "We arrived in time for the train." = we arrived just before the train left "We arrived on time for the train" = we arrived at the proper time to catch the train

Expanding a little on the other answers: "On time" means arriving at exactly the time you needed or intended to. It means you're punctual. If the meeting starts at 5:00 p.m. and you arrive at 5:00 p.m. you have arrived on time. "In time" gives the sense of arriving at some point before a deadline. So if the meeting is at 5:00 p.m. you can arrive anytime before 5:00 p.m. and be in time for the meeting. Hope that helps!

See http://www.italki.com/answers/question/110507.htm answer by Maxey. On time means that something has happened at a planned time. If a bus is "on time" that means that it has arrived at it's stop at the time on its schedule , when it was supposed to be there. Being "in time" always implies that something else will happen. It does not necessarily say that a specific time has been arranged beforehand. A will occur in time for B (or to prevent B, as is often the case). "He arrive in time to shut the machine down and prevent it from overheating." "She called just in time to warn us that the flight had been canceled. Otherwise, we would have driven all the way to the airport.

ON TIME & IN TIME: ON TIME: Very punctual, not late. If something happens on time, which means it happens at the time which was planned. Be on time. Don’t be late. IN TIME: Soon enough. If something happens in time, which means it happens soon enough. Be in time to occupy your seat at Cricket stadium. Don’t be too late. Note: 1. The opposite of on time is late. 2. The opposite of in time is too late