The present work reports on a new pharmaceutical formulation for oral delivery of diclofenac sodium (DFNa), a non-steroidal anti-inflammatory drug (NSAID). Although DFNa itself is water-soluble at neutral pH, it was readily suspended in soybean oil via complex formation with an edible lipophilic surfactant and a matrix protein. The resulting solid-in-oil (S/O) suspension containing stably encapsulated DFNa in an oil phase markedly reduced the risks for gastrointestinal ulcers upon oral administration even at the LD(50) level in rats (ca. 50 mg/kg DFNa). In addition, plasma concentration of DFNa upon administration of an S/O suspension was comparable with that of the aqueous counterpart at the same DFNa dose. These results indicate the potential use of S/O suspensions as novel oil-based pharmaceutical formulations for oral delivery of water-soluble drugs without causing severe mucitis.