To develop a piroxicam-loaded gelatin microcapsule with enhanced bioavailability, a gelatin microcapsule encapsulated ethanol and piroxicam has been formulated by using gelatin as a water-soluble polymer shell. The aqueous solubility and bioavailability of piroxicam in piroxicam-loaded microcapsule in rats were then evaluated compared to piroxicam powder. The piroxicam-loaded gelatin microcapsule spherical in shape with smooth surface showed the geometric mean diameter of about 19 microm. It had the piroxicam solubility of about 1.87 mg/ml and the amount of ethanol of about 4.37 microg/mg. Furthermore, it gave significantly higher total plasma concentrations, Cmax and area under the blood concentration-time curve (AUC) of piroxicam in rats than did piroxicam powder, indicating that the drug from gelatin microcapsule could be more orally absorbed in rats. In particular, the AUC of piroxicam in gelatin microcapsule was significantly about 2 fold increased compared to piroxicam powder. This enhanced oral relative bioavailability of piroxicam in gelatin microcapsule was contributed by the marked increase in the absorption rate of piroxicam due to the improved solubility of piroxicam. Thus, the piroxicam-loaded gelatin microcapsule developed using spray-drying technique with gelatin, sodium lauryl sulfate and ethanol would be useful to deliver piroxicam in a pattern that allows fast absorption in the initial phase, leading to better absorption.