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The in vitro/in vivo characterization of antacid-insulin co-encapsulated poly(lactide-co-glycolide) (PLGA) nanoparticles is presented here. The optimized nanoparticle composition has 1% surfactant (didodecyl dimethylammonium bromide) and 2% antacid (magnesium hydroxide or zinc carbonate) in the size range ∼136–143 nm with ∼81–85% entrapment of insulin at a 4% (w/w) initial load to that of polymer. Molecular characterization using circular dichroism, fluorescence and Fourier transform infrared spectroscopy showed that the structural integrity of insulin was maintained during formulation. Furthermore, the encapsulated insulin was well protected under in vitro simulated gastric and intestinal fluids. Nanoparticle insulin results in six fold increase in oral bioavailability to that of plain insulin in healthy rats. In diabetic rats, a 120 IU/kg oral dose of insulin nanoparticles achieved an equivalent blood glucose lowering effect to a 20 IU/kg subcutaneous (sc) dose of insulin solution, the nadir in blood glucose concentration occurring 24 h and 1 h post-administration, respectively. Both sc insulin and oral nanoparticle insulin partially attenuated hyperglycemia-induced inflammation caused by tumor necrosis factor α, but not by interleukin-6 or C-reactive protein; on the other hand, subcutaneous insulin was found to be more effective on lipid profile measured in the form of high density lipoprotein, cholesterol and triglyceride. Successful oral insulin could be beneficial in type II complications.