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Biodegradable microcapsules containing bupivacaine/dexamethasone produce an anesthetic duration of 7–11 days in animal models. In this investigation, we explored the effect of increasing doses (Part 1) and the effect of including dexamethasone (Part 2) on the onset, density, and duration of analgesia and anesthesia produced by bupivacaine microcapsules. Concentrations ranging from 0.3125% to 5.0% in microcapsules were compared with 0.25% aqueous bupivacaine (bilateral injection, three intercostal nerves, 2 mL per nerve) (Part 1). Part 2 compared 2.5% microcapsules with or without the inclusion of dexamethasone by unilateral blockade. Sensory block was assessed by pinprick, temperature sensation, and subjective numbness (0, not numb; 10, totally numb). Pharmacodynamic assessments and plasma drug concentrations of bupivacaine and dexamethasone were measured for 96 h. The onset time was reduced and the duration of analgesia increased over the 0.3125%–5.0% dose range (P < 0.02). Onset with 2.5% microcapsules approximated that of 0.25% aqueous bupivacaine. Microcapsule block duration increased to at least 96 h and was significantly longer than aqueous bupivacaine (P < 0.001). Inclusion of dexamethasone increased the duration of pinprick anesthesia in 2.5% microcapsules (P = 0.03). We conclude that bupivacaine/dexamethasone microcapsules are well tolerated and demonstrate a dose-related effect in onset and duration of intercostal blockade. Inclusion of dexamethasone increases intercostal block anesthesia.