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This study examines the preparation of sustained-release lidocaine polyelectrolyte complex using reactive melt extrusion. Eudragit L100-55 was selected as the ionic polymer. The influence of drug forms (freebase vs. hydrochloride salt) on lidocaine–Eudragit L100-55 interactions, physical stability, and dissolution properties of extrudates was investigated. It was confirmed by DSC, FT-IR and Raman spectroscopy that polyelectrolyte could only form via the acid–base reaction between Eudragit L100-55 and lidocaine freebase. Due to this ionic interaction, the lidocaine extrudate was physically more stable than the lidocaine hydrochloride extrudate during the storage under stressed condition. Drug release from lidocaine extrudate was a function of drug solubility, polymer solubility, drug–polymer interaction, and drug-induced microenvironment pH. At 30% drug loading, extrudate exhibited sustained release in aqueous media at pH 1.2 and 4.5. Due to the alkaline microenvironment pH induced by dissolved lidocaine, Eudragit L100-55 was solubilized and sustained-release was not achieved in water and aqueous media at pH 5.5. In comparison, lidocaine hydrochloride induced an acidic microenvironment. Drug release of lidocaine hydrochloride extrudate was similar at pH 1.2, 4.5, 5.5 and water with drug being released over 10 h. The release of lidocaine hydrochloride from the extrudates in these media was primarily controlled by microenvironment pH. It is concluded that different forms of lidocaine resulted in different drug–polymer interactions and distinctive physicochemical properties of extrudates.