The objective of this investigation is to develop a multi-unit sustained release dosage form of a water soluble drug from a completely aqueous environment avoiding the use of any organic solvent. The drug was complexed with resin and calcium alginate or polyethyleneimine-treated calcium alginate beads loaded with the resinate were prepared by a ionic/polyelectrolyte complexation method. The effect of different formulation variables on the characteristics of the beads was investigated. Although the drug release from spherical and smooth-surfaced calcium alginate beads in both acidic and alkaline dissolution media were slower than those obtained from plain resinate, none of the variables were found to prolong the drug release considerably due to rapid swelling and disintegration of calcium alginate beads in alkaline medium. On the other hand, drug release from polyethyleneimine-treated calcium alginate beads in acidic medium did not increase appreciably following a burst release. However, in alkaline medium, the drug release was found to increase gradually and extend over a different period of time depending on the intensity of polyethyleneimine treatment. Scanning electron micrographs revealed the formation of a dense membrane around the resinate-loaded calcium alginate matrix. The membrane appeared to be responsible for reduced swelling and protracted disintegration of the beads resulting in slow release of the drug. The results indicate that sustained release of a water soluble drug from polyethyleneimine-treated calcium alginate beads could be achieved by adjusting the formulation variables.