Furosemide-loaded calcium alginate (ALG), calcium alginate-polyethyleneimine (ALG-PEI) and alginate-coated ALG-PEI (ALG-PEI-ALG) beads were prepared by ionotropic/polyelectrolyte complexation method to achieve controlled release of the drug. Effects of several formulation factors on the characteristics of the beads were investigated. Although variation in formulation factors did not influence the drug-loading efficiency (DLE) of ALG beads, rapid release of the drug in simulated intestinal fluid (SIF) could not be prevented. PEI treatment of ALG beads, however, prolonged the drug release considerably. Ionic interaction, as appeared from FTIR studies, between alginate and PEI led to the formation of polyelectrolyte complex membrane, the thickness of which was dependent on the conditions of PEI treatment as demonstrated by scanning electron microscopy (SEM). The membrane acted as a physical barrier to drug release from ALG-PEI beads. Alginate coating of ALG-PEI beads further prolonged the release of the drug by increasing membrane thickness and reducing swelling of the beads possibly by blocking the surface pores. Differential scanning calorimetry (DSC) study indicated that drug was not degraded by PEI treatment. The release data from ALG-PEI beads showed a good fit in power law expression, whereas the release data from ALG-PEI-ALG beads were found to fit in modified power law expression, and the mechanism of drug release changed from super case II transport to nearly Fickian transport, depending on the degree of gelation and formation of polyelectrolyte complex membrane.