Glipizide is an effective antidiabetic agent, however, it suffers from relatively short biological half-life. To solve this encumbrance, it is a prospective candidate for fabricating glipizide extended release microcapsules. Microencapsulation of glipizde with a coat of alginate alone or in combination with chitosan or carbomer 934P was prepared employing ionotropic gelation process. The prepared microcapsules were evaluated in vitro by microscopical examination, determination of the particle size, yield and microencapsulation efficiency. The filled capsules were assessed for content uniformity and drug release characteristics. Stability study of the optimised formulas was carried out at three different temperatures over 12 weeks. In vivo bioavailability study and hypoglycemic activity of C9 microcapsules were done on albino rabbits. All formulas achieved high yield, microencapsulation efficiency and extended t1/2. C9 and C19 microcapsules attained the most optimised results in all tests and complied with the dissolution requirements for extended release dosage forms. These two formulas were selected for stability studies. C9 exhibited longer shelf-life and hence was chosen for in vivo studies. C9 microcapsules showed an improvement in the drug bioavailability and significant hypoglycemic activity compared to immediate release tablets (Minidiab® 5 mg). The optimised microcapsule formulation developed was found to produce extended antidiabetic activity.