A new sustained-release dosage form of nitrofurantoin (NF) as microcapsules has been prepared by a mild chitosan/calcium alginate microencapsulation process. These microcapsules have been prepared by adding, dropwise, a solution of sodium alginate containing NF into a chitosan-CaCl2 system. About 70-80% of the drug is released into phosphate buffer, pH = 7.4 within 6 h. Drug release into the gastric medium is found to be relatively slow compared to that into the intestinal medium. From scanning electron microscopic studies, it appears that the chitosan modifies the NF-alginate microspheres. These findings suggest the possibility of modifying the formulation to obtain the controlled release of NF in an oral sustained-delivery system.