Objectives: The aim of this research study was the formulation and characterization of Diacerein (DC) loaded Nanosponges (NSs) for enhancing oral solubility to treat Osteoarthritis (OA). Methods: NSs were prepared by emulsion solvent diffusion method by varying the concentration of Ethyl cellulose (EC) in different ratios. The prepared NSs were characterized in terms of entrapment efficiency, particle size, zeta potential, and surface morphology. Powder X-ray diffraction (PXRD) studies of selected NS formulations were performed. Results: The percent yield of the formulations varied from 75.00 ± 0.36% to 85.6 ± 0.78%. Particle size and percent capture efficiency ranged from 224.9 to 456.4 nm and from 61.20 ± 0.54% to 78.60 ± 0.55%, respectively. Scanning electron microscopy revealed that NSs were spherical and porous. F1 batch (1:1) showed good entrapment efficiency and particle size reduction. PXRD studies showed a decrease in the crystalline properties of DC. In vitro release studies demonstrated that the controlled release of the drug from the NSs increased the dissolution rate. Conclusion: This study concludes that DA-NSs are effective for drug delivery and DA-NSs improve oral solubility which helps therapeutic efficacy.