Gelrite is an ion-activated polymer prepared by partial acetylation of gellan gum, an exogeneous polysaccharide present in Pseudomonas elodea. Its unique cation-dependent gelling property at 33 degrees C has been exploited for the formulation of in situ gelling hydrogels for ophthalmic and oral drug delivery. Gelrite based oral formulations are known to sustain the drug levels at acidic pH due to the formation of 3D-lattice by cross-linking of uronic acid groups with cations. An extrusion method for formation of microspheres has been reported for Gelrite. The method cannot be successfully applied for encapsulation of hydrophilic moieties and has thus been modified in the present study. The microparticles prepared were optimized for various encapsulation variables such as particle size, shape, drug entrapment efficiency and in vitro drug release. A maximum of 41.87 +/- 0.2 % drug loading was obtained for the improved method. The drug release was found to be sustained in acidic medium (50% in SGF pH 1.2) for a period of 4 hours while burst release was observed in SIF pH 7.4. The work thus, presents a simplified microencapsulation method for hydrophilic drugs with higher entrapment efficiency for Gelrite, taking rifampicin as the model drug.