Diclofenac sodium and alginate was intercalated into montmorillonite to form uniform sized beads by gelation method. The structure and surface morphology of the synthesized composite beads were characterized by powdered X-ray diffraction, Fourier transform infrared spectroscopy, thermo gravimetric analysis and scanning electron microscopy. Diclofenac release kinetics of the composite in simulated intestinal fluid medium (pH 7.4) and effect of montmorillonite content on the in vitro release of diclofenac from diclofenac-montmorillonite-alginate composites bead was investigated by UV/Vis spectrophotometer. Diclofenac encapsulation efficiency in the montmorillonite-alginate composites bead increases with an increase in the montmorillonite content. The control release of diclofenac from diclofenac-montmorillonite-alginate composites beads was observed to be better as compared to diclofenac-alginate beads.