In this study, diclofenac-loaded Eudragit S100-based nanosuspension was prepared by nanoprecipitation method and characterised for particle size, morphology, in vitro release, and for its in vivo ocular anti-inflammatory activity. The diclofenac-loaded Eudragit S100 nanosuspension was found to have a particle size of 172 nm, polydispersibility index of 0.14 and zeta potential of -23.7 +/- 6.07 mV, indicating that the nanosuspension is fairly stable. The nanosuspended particles were found to be spherical in shape. The nanosuspension was found to provide a sustained in vitro release, following the Higuchi square-root release kinetics. The results indicated that the nanosuspension released the drug by combination of dissolution and diffusion. The in vivo evaluation of nanosuspension in PGE(2)-induced ocular inflammation in rabbit model revealed a significantly (p < 0.05) higher inhibition of PGE(2)-induced polymorphonuclear leukocytes migration and lid-closure scores as compared with the aqueous solution of diclofenac.