Due to inflammatory reactions complicating bioabsorbable devices, the aim of this study was to develop and characterize bioabsorbable implants with anti-inflammatory drug releasing properties. Polylactide-co- glycolide (PLGA) 80/20 was compounded with diclofenac sodium (DS) to produce rods. Thermal properties were analyzed using differential scanning calorimetry (DSC). Inherent viscosity (eta(inh)) was measured to evaluate the drug effect on the extrude polymer. Drug release measurements were performed using UV-spectrophotometer. Five parallel samples from each type of rods were examined, first at 6 hour intervals, then on daily basis, and later twice a week. DS was released in 110 days from thinner rods and in 150 days from thicker rods. Drug release comprised a starting peak, slow release phase, then a high release phase, and a burst release phase. DSC analysis showed that DS containing rods had crystallinity in their structure. In conclusions, it is feasible to combine PLGA 80/20 and DS by using melt extrusion. Released DS concentrations reached local therapeutic levels, but the release profile was complex and therapeutic levels were not reached all the time.