Mucoadhesive microspheres were found to be more efficient for controlled drug delivery. Mucoadhesion ensures increased contact time of the dosage form with the absorption site while microspheres sustained the release of drug from the dosage form at the site of absorption and result into improved bioavailability of drug. The present study involves formulation and evaluation of mucoadhesive microspheres of oral hypoglycemic drug, metformin hydrochloride. The microspheres were formulated by emulsification phase separation technique using chitosan as polymer and gluteraldehyde as cross-linking agent. Preformulation studies showed that the compositions are compatible with each other. The formulation batches were prepared by 32 factorial design with two independent parameters, polymer to drug ratio and stirring speed. All the batches were evaluated for particle size, flow properties, mucoadhesion, microencapsulation efficiency, drug release and stability. The formulation MF5 showed nearly spherical microcapsules, good flowability, microencapsulation efficiency, mucoadhesion, stability and extended drug release upto 12 hours. An approach to develop a stable mucoadhesive microspheres of oral hypoglycemic drug, Metformin hydrochloride has been successfully achieved.