Objectives In the present study, an attempt is made to develop novel multifunctional sustained-release minitablets in a capsule system by film coating Fesoterodine for the treatment of urinary incontinence (increased urinating frequency). Methodology The direct compression technique was used to formulate the minitablets, and coating was applied using hydroxypropyl methylcellulose (HPMC) phthalate. The pre-formulation study was performed using tools like differential scanning calorimetry (DSC), infrared spectroscopy (IR) and post-formulation parameters such as hardness, thickness, weight variation, uniformity, and drug release. Drug release kinetics were studied for the formulations F1–F11. Results All the pre- and post-formulation parameters were found to be within the limits. F1 and F2 result in burst release of the drug within 30 minutes. For the F3, F4, and F5 formulations, HPMC phthalate-coated minitablets show almost 100% drug release in 3, 4, and 5 hours, respectively. F6, F7, and F8 (2.5%, 5%, and 10% formaldehyde-coated minitablets, respectively) show drug releases in the small intestine, and the release was prolonged for 24 hours, whereas F9, F10, and F11 (2.5%, 5%, and 10% glutaraldehyde-coated minitablets, respectively) release in the small intestine, but drug release takes more than 20 hours. Conclusion Film-coated minitablets were satisfactorily developed in terms of various post-compression parameters like hardness, thickness, friability, weight variation, and content uniformity. IR and DSC studies revealed no significant drug excipient interactions. HPMC phthalate-coated minitablets released in the buffer, and it was supposed that the drug releases in the intestine, which leads to better absorption and follows Korsmeyer-Peppas release kinetics.