To control the release rate and mask the bitter taste, cetirizine dihydrochloride (CedH) was entrapped within chitosan nanoparticles (CS-NPs) using an ionotropic gelation process, followed by microencapsulation to produce CS matrix microparticles using a spray-drying method. The aqueous colloidal CS-NPs dispersions with a drug encapsulation efficiency (EE) of <15%, were then spray dried to produce a powdered nanoparticles-in-microparticles system with an EE of >70%. The resultant spherical CS microparticles had a smooth surface, were free of organic solvent residue and showed a diameter range of 0.5∼5 μm. The in vitro drug release properties of CedH encapsulated microparticles showed an initial burst effect during the first 2 h. Drug release from the matrix CS microparticles could be retarded by the crosslinking agent pentasodium tripolyphosphate or the wall material. The technique of ‘ionotropic gelation’ combined with ‘spray-drying’ could be applicable for preparation of CS nanoparticlesin-microparticles drug delivery systems. CS-NPs based microparticles might provide a potential micro-carrier for oral administration of the freely water-soluble drug — CedH.