Novel interpenetrating network (IPN) hydrogel microspheres, consisting of xanthan gum and poly(vinyl alcohol) were prepared by water-in-oil emulsion crosslinking method using glutaraldehyde for the controlled release of diclofenac sodium,as a model drug.Various formulations were prepared by changing the ratio of XG:PVA, extent of cross-linking in order to optimize the formulation variables on drug encapsulation efciency, and release rate. Formation of IPN and the chemical stability of DS after preparation of microspheres was confrmed by FTIR, DSC & XRD analysis were done which confrmed molecular dispersion of DS in the IPN. Microspheres formed were spherical with smooth surfaces, as evidenced by SEM & mean particle size measured by laser light scattering technique. Drug encapsulation of up to 82.94% was achieved by UV method. Both equilibrium & dynamic swelling studies and in vitro release studies were performed in pH 1.2 and 7.4. Release data indicated Fickian trend of drug release. In vivo pharmacokinetic data showed prolonged drug release as compared with DS solution. Based on the results it was concluded that these IPN microspheres provided controlled release application of DS