Schizophrenia is a lifelong debilitating illness requiring extended treatment with antipsychotic agents. Non-adherence to therapy is a very common and severe problem in these patients, which can be improved by prescribing depot injectable or implant formulations. The purpose of this study was to develop PNA microgels based in situ gelling system for sustained release of olanzapine. PNA [poly(N-isopropylacrylamide-co-acrylic acid)] microgels were prepared using a previously developed method employing emulsion polymerization technique, applying one of the optimized formulations. Olanzapine loaded PNA microgels were characterized by viscosity measurements, cytotoxicity assay and TEM analysis. In vitro release of olanzapine from PNA microgels was determined on different pH and temperature range. In vivo studies were performed on male Sprague-Dawley rats with average weight of 315 g (n = 6). Olanzapine loaded PNA microgels were successfully prepared with drug loading efficiency of 2.14 ± 0.52%. The fluid like viscosity of microgels formulation at lower pH value (pH 5.0) and room as well as body temperature made it favorable for injection form. In vitro release was characterized by a high initial burst release up to 38.6% of the drug release within 2 h. In vivo release data also indicated similar initial high burst release that might indicate toxicity when administered in injectable dosage form but subcutaneous injection of PNA microgels proved fruitful results as this initial burst release followed a sustained release for 72 h. Hence, PNA microgels can be formulated for short term depot injection, which can potentially provide the release of olanzapine for 72 h.