Inflammatory bowel disease (IBD) is a chronic relapsing disorder of the intestine, with increasing incidence worldwide. At present, the management of IBD is an unmet medical need due to the ineffectiveness of currently available drugs in treating all patients, and there is strong demand for novel therapeutics. In this regard, vasoactive intestinal peptide, a potent anti-inflammatory endogenous hormone, has shown promise in managing multiple immune disorders in animal models. However, when administered in the free form, VIP undergoes rapid degradation in vivo, and with continuous infusion, it causes severe dose limiting side effects. To overcome these barriers, we have developed a superior mode to deliver VIP in its native form, using sterically stabilized micelles (VIP-SSM). Our previous studies demonstrated that, VIP, when administered in SSM, prevented joint damage and inflammation in a mouse model of rheumatoid arthritis at a significantly lower dose than the free peptide, completely abrogating the serious side effect of hypotension associated with VIP. In the current study, we demonstrate the therapeutic benefit of VIP-SSM over free peptide in reversing severe colitis associated with IBD. First, we conducted preliminary studies with dextran sulfate sodium (DSS) induced colitis in mice, to determine the effectiveness of VIP administered on alternate days in reducing disease severity. Thereafter, a single intra peritoneal injection of VIP-SSM or the free peptide was used to determine its therapeutic effect on the reversal of colitis and associated diarrhea. The results demonstrated that when administered on alternate days, both VIP-SSM and VIP were capable of alleviating DSS colitis in mice. However, when administered as a single dose, in a therapeutic setting, VIP-SSM showed superior benefits compared to the free peptide in ameliorating colitis phenotype. Namely, the loss of solid fecal pellets and increased fluid accumulation in colon resulting from DSS insult was abrogated in VIP-SSM treated mice and not with free VIP. Furthermore, reduced protein and mRNA levels of the major chloride bicarbonate exchanger, down regulated in adenoma (DRA), seen with DSS was reversed with VIP-SSM, but not with the free peptide. Similarly, VIP-SSM treatment significantly reduced the elevated mRNA levels of pro-inflammatory cytokines and showed significant histologic recovery when compared to mice treated with free VIP. Therefore, these results demonstrated that as a single dose, the anti-inflammatory and antidiarrheal effects of VIP can be achieved effectively when administered as a nanomedicine. Therefore, we propose VIP-SSM to be developed as a potential therapeutic tool for treating ulcerative colitis, a type of IBD.