The preparation of nanoparticles (NP) as an improved colloidal carrier system for the hydrophilic drug (Diclofenac Sodium) was investigated. Owing to the solubility of the drug in water, the double emulsion technique was used for the encapsulation of the drug. To achieve submicron size as well as increasing monodispersity, a microfluidizer was used as ultrasonication device. A biodegradable polymer, poly[lactide-co-glycolide] 50:50 (PLGA) was used in the process. The loading was improved by varying the concentration of the drug in the inner aqueous phase, whereupon the polydispersity and the particle size were slightly affected. But encapsulation efficiency decreased with higher drug loading in the inner aqueous phase. All release profiles were characterized by an initial burst effect followed by a sustained release. © 2003 Indian Society for Surface Science and Technology.