ETODOLAC is a non-steroidal anti-inflammatory drug used for treatment of Rheumatoid arthritis and Osteoarthritis. Its therapeutic effect results from inhibition of both isoforms of cyclo-oxygenase enzyme COX-1 and COX-2. This decreases the synthesis of peripheral prostaglandins (PG) involved in mediating inflammation and this results in a number of undesirable side effects such as GIT complaints. To overcome these side effects and to control the rate of its release, alginate microbeads and chitosan coated alginate microbeads prepared. A Box-Behnken experimental design was employed to produce controlled release Etodolac microbeads by Extrusion/External gelation technique. A three-factors, three levels design within 15 runs was suitable for this research. The independent variables were the drug-polymer ratio, concentration of the cross linker and speed intensity. The influence of these formulation factors was evaluated for entrapment efficiency and in-vitro release of Etodolac from the microbeads at the end of two hours and at the end of eight hours. The microbeads were characterized for their shape and size. Alginate microbeads showed rough surface whilst chitosan coated alginate microbeads showed smooth surface. The microbeads exhibited entrapment efficiency from 61.31% to 97.11% and particle size in the range of 700µm to 900 µm. The release results indicated that the chitosan-coated microbeads displayed a more controlled release than the uncoated microbeads. Selected formulae exhibited a significant anti-inflammatory effect on incited rat paw edema after four hours.