We developed and optimized a novel pseudoephedrine hydrochloride (PSE) sustained-release dosage form. The system comprises immediate-release mini-tablets (IRMT) and sustained-release mini-tablets (SRMT) contained in a hydroxypropyl methylcellulose (HPMC) capsule. The IRMT contained PSE, excipients and low-substituted hydroxypropyl cellulose (a disintegrant), and the tablets were coated with HPMC, a water-soluble polymer. IRMT prepared with varying amounts of low-substituted hydroxypropyl cellulose all dissolved completely within the first 60min, so low-substituted hydroxypropyl cellulose content does not greatly influence PSE release. The SRMT contained only PSE and excipients, and were coated with a mixture of HPMC and the water-insoluble polymer ethylcellulose. The PSE release profile for the SRMT could be controlled by varying the thickness of the coat, and the lag time could be controlled by varying the amount of ethylcellulose present in the polymer coat. PSE was released immediately from our encapsulated mini-tablet system and release was sustained over an extended period of time: the PSE in the IRMT dissolved within 60min, whereas the PSE in the SRMT was released over 8-10h. This system can be modified to yield various extended drug-release profiles, thereby harnessing the benefits of both SRMT and IRMT.