Magnetic nanoparticles encapsulated in Methyl methacrylate (Eudragit L-100) microspheres containing Indomethacin drug were prepared and their detailed structural and magnetic characteristics were studied. Iron oxide nanoparticles were obtained by chemical coprecipitation of Fe(II) and Fe(III) salts and stabilized with tetra-methyl ammonium hydroxide. Microspheres were prepared by solvent evaporation technique. We characterized the magnetic microspheres in terms of morphology, composite microstructure, size and size distribution, magnetic properties and in-vitro release patterns. The microspheres were uniform both in shape and usually also in size; their size distribution was narrow. All the magnetic parameters confirm superparamagnetic nature of the microspheres with magnetizations up to 20-30 emu/g of microspheres. The in-vitro release profile was studied in pH 7.4 phosphate buffer medium up to 8 hours using USP XXII dissolution apparatus. Drug release in the first hour was found to increase and reached a maximum, releasing approximately 60-85% of the total drug content from the microspheres within 8 hours. From this study, it could be suggested that magnetic Methyl methacrylate microspheres could be retained at their target site invivo and such microspheres can be used in biomedical applications and research areas such as target drug delivery, selective blood detoxification, tissue engineering and replacement, and magnetic resonance imaging (MRI) contrast agents.