For many parenteral drugs, there is still no standardized method for in vitro release (IVR) testing available. This article presents the development of a new IVR method for oil solutions using a dialysis membrane and USP II apparatus coupled to a fiber optic UV-Vis spectrometer. Experiments were performed using dexamethasone formulations containing castor oil as a solvent with the addition of cosolvents, 20 % (v/v) of isopropanol or Capryol® 90. Based on solubility testing results, castor oil was chosen as the best solvent amongst other vegetable oils, while a significant increase in solubility was obtained by adding either of the two cosolvents. Partitioning experiments were performed to ensure these formulations could achieve prolonged drug release. IVR testing was performed with model formulations and critical test parameters were varied in order to examine the method’s sensitivity. The developed method was sensitive to temperature and stirring rate, while coupling the USP II apparatus with a fiber optic UV-Vis spectrometer enabled complete automation. Moreover, due to the interference of excipients on fiber optic detection of dexamethasone during the release testing, derivative spectroscopy was successfully introduced for the elimination of the interference. The developed IVR method described herein could be useful in preformulation investigations and the early development of novel formulations.