Cyclodextrin nanosponges are solid nanoparticles, designed by cross-linking of cyclodextrin polymer; it has been used widely as a good delivery system for water insoluble drugs. The aim of this study is to enhance the solubility of Piroxicam (PXM) using β-Cyclodextrin based nanosponges formulations. PXM nanosponge (PXM-NS) formulations were prepared using β-cyclodextrin and carbonyldiimidazole as a cross linker, three ratios of β-cyclodextrin to crosslinker in addition to three drug to nanosponges ratios were tested. Piroxicam nanosponge formulations were characterized for its particle size, zeta potential, physical compatibility and in vitro release. Stability studies at three temperatures (4 °C, 25 °C and 40 °C) were done for optimal formula. Finally, the in vivo analgesic activity and pharmacokinetic parameters of the optimal formula were conducted. The optimized PXM-NS formula (PXM-NS10) showed particle size (362 ± 14.06 nm), polydispersity index (0.0518), zeta potential (17 ± 1.05 mV), and %EE (79.13 ± 4.33). The dissolution study showed a significant increase in the amount of PXM dissolved compared with the unformulated drug. Stability studies confirmed that nanosponge showed accepted stability for 90 days at 4 °C and 25 °C. In vivo analgesic studies verified that there was a significant enhancement in the analgesic response to PXM in mice, and 1.42 fold enhancement in the relative bioavailability of PXM-NS10 as compared to commercial tablets. Nanosponge prepared under optimal conditions is an encouraging formula for increasing the solubility and therefore the bioavailability of Piroxicam.