Encapsulating the drug within a permeation barrier or dispensing drug particles in a diffusion matrix is the formulation process involved in the encapsulation type depot preparation. The drug release is controlled by the permeation rate across the permeation barrier and the rate of biodegradation of the barrier macromolecules. Different biodegradable or bioabsorbable macromolecules such as gelatin, dextran, polylactic acid, phospholipids, long-chain fatty acids and glycerides are used for designing the permeation barrier and diffusion matrix. The examples for this type of depot formulation are-biodegradable microcapsule containing naltrexone pamoate, liposomes and norethindrone-releasing biodegradable lactide–glycolide copolymer beads.