Nanosponges (NS) were synthesized by crosslinking of beta cyclodextrins with diphenyl carbonate. It is a hyper-branched polymer with an ultra high encapsulation efficiency leading to formation of colloidal systems. Dexamethasone (DEX) on the other hand is a poorly soluble drug with a poor corneal permeability. Excessive instillation of ocular suspension of dexamethasone leads to various complications thereby necessitating a novel nanotherapeutic system with greater ocular retention and permeation. This study aimed at formulating complexes of DEX with three types of beta-cyclodextrin NS obtained with different cross-linking ratio (viz. 1:2, 1:4 and 1:8 on molar basis with the cross-linker) for ocular applications. Nano-encapsulation was done by incubation-lyophilization technique to yield various formulations of Nanosponges (viz. F1:2, F1:4 and F1:8). From drug loading studies it was found that DEX was loaded in the highest amount in (NS 1:4), as much as 10% w/w as compared to 3% w/w and 5% w/w in 1:2 and 1:8 types of NS respectively. In vitro release studies showed that release of DEX was in a controlled manner for around 300 minutes. The particle sizes of the loaded NS formulations were between 350 and 660 nm with low polydispersity indices. The zeta potentials were sufficiently high (-20 to -27 mV) to obtain a stable colloidal nanosuspension. X-ray powder diffraction, differential scanning calorimetry and Fourier transform infra-red attenuated transmittance reflectance spectroscopy studies confirmed the interactions and encapsulation of DEX with NS. Transmission electron microscopy and atomic force microscopy studies confirmed its spherical colloidal nature. Ex vivo safety assessment done on bovine cornea showed no adverse reactions proving the safety of the system. Adhesion and retention properties of NS formulations were confirmed by use of 6-Coumarin as a model fluorescent marker. Corneal permeability of DEX from optimized formulations done on excised bovine cornea in corneal holders showed that the NS formulation showed higher permeability than the marketed formulation. Copyright © 2013 American Scientific Publishers All rights reserved.