The use of polymeric carriers in formulations of therapeutic drug delivery systems has gained widespread application, due to their advantage of being biodegradable and biocompatible. Among the microparticulate systems, microspheres have a special importance since it is possible to target drugs and provide controlled release. Diclofenac sodium (DS), is a potent drug in the NSAID group having non-steroidal, anti-inflammatory properties, and is widely used in the treatment of rheumatoid arthritis, osteoarthritis and ankylosing spondylitis. In this present study, it was aimed to prepare microsphere formulations of DS using a natural biodegradable polymer as a carrier for intraarticular administration to extend the duration period of the dosage form in the knee joint. Microsphere formulations of DS which were prepared were evaluated in vitro for particle size, yield value, encapsulation efficiency, surface morphology, and in vitro drug release. Two appropriate formulations were selected for in vivo trials. For the in vivo studies, Technetium-99m labelled polyclonal human immunogammaglobulin (Tc-99m-HIG) was used as the radiopharmaceutical to demonstrate arthritic lesions by gamma scintigraphy. After the induction of arthritis in knee joints of rabbits, the radio-labelled microspheres loaded with DS were injected directly into the articular cavity and at specific time points gamma scintigrams were obtained to find the residence time of the microspheres in knee joints in order to determine the most suitable formulation.