Novel chitosan microspheres with lower cytotoxicity were fabricated in this study and their drug release characteristics were investigated. Genipin, a naturally occurring crosslinking reagent that has been used in herbal medicine and in the production of food dye, was used to prepare crosslinked chitosan microspheres by a water-in-oil dispersion method. The crosslinking mechanism examined by FTIR and C-13-NMR suggests that the crosslinking of chitosan by genipin leads to the formation of secondary amide and heterocyclic amino linkage. The polycation-anionic drug interaction between chitosan and indomethacin was pH dependent and could affect the dissolution property of indomethacin. By examination of the release profiles of tile crosslinked chitosan microsphere, it was found that the release of indomethacin from the microsphere was sustainable and influenced by factors such as crosslinking of microsphere and chitosan-indomethacin interaction, thus establishing crosslinked chitosan microsphere as a very promising polymeric carrier for drug release.