Dermatan sulfate (DS) is a glycosaminoglycan (GAG) with a great potential as a new therapeutic agent in tissue engineering. The aim of the present study was to investigate the formation of polyelectrolyte complexes (PECs) between chitosan and dermatan sulfate (CS/DS) and delivery of DS from PEC-containing alginate/chitosan/dermatan sulfate (Alg/CS/DS) microspheres for application in tissue regeneration. The CS/DS complexes were initially formed at different conditions including varying CS/DS ratio (positive/negative charge ratio), buffer, and pH. The obtained CS/DS complexes exhibited stronger electrostatic interaction, smaller complex size, and more stable colloidal structure when chitosan was in large excess (CS/DS 3:1) and prepared at pH 3.5 as compared to pH 5 using acetate buffer. The CS/DS complexes were subsequently incorporated into an alginate matrix by spray drying to form Alg/CS/DS composite microspheres with a DS encapsulation efficiency of 90-95%. The excessive CS induced a higher level of sustained DS release into Tris buffer (pH 7.4) from the microspheres formulated at pH 3.5; however, the amount of CS did not have a significant effect on the release from the microspheres formulated at pH 5. Significant cell proliferation was stimulated by the DS released from the microspheres in vitro. The present results provide a promising drug delivery strategy using PECs for sustained release of DS from microspheres intended for site-specific drug delivery and ultimately for use in tissue engineering.