A simple and commercially viable method of preparation of chitosan microparticles (MPs) was adopted for the entrapment of clozapine, which can be easily scaled-up to controlled drug delivery dosage form. This method is devoid of tedious processes like emulsification in oil phase, spray-drying, etc. MPs have been prepared by changing the experimental variables such as extent of crosslinking and amount of clozapine loading in order to optimize the process variables on the final percent drug entrapment efficiency, size of MPs and release rates. Absence of chemical interactions between drug, polymer and crosslinking agent after the production of MPs was confirmed by Fourier transform infrared spectroscopy (FTIR). Differential scanning calorimetry (DSC) and X-ray diffraction (XRD) spectra were obtained for clozapine-loaded chitosan MPs to understand the crystalline nature of the drug after entrapment. The results indicated a molecular level dispersion of clozapine in the polymer matrix. Effect of crosslinking and drug loading on thermal decomposition of chitosan was studied by thermogravimetry (TGA) and these data indicated that pure chitosan is stable when compared to clozapine-loaded chitosan. MPs produced were irregular in shape, with average particle sizes in the range of 543-698 microm as measured by the laser light scattering technique. Clozapine entrapment up to 98.97% was obtained as determined by high performance liquid chromatography. In vitro release studies were performed in phosphate buffer pH 7.4 solution and the release of clozapine was achieved up to 12 h. Swelling studies were conducted in water and diffusion coefficients (D) and diffusional exponents (n) for water transport were determined using the empirical equation. In vivo absorption kinetics of clozapine and clozapine-loaded MPs were investigated in albino rats. These results indicated that absorption of clozapine from MPs was delayed since the area under the curve was higher when compared to neat clozapine.