BACKGROUND: Minimally invasive glucose biosensors with increased functional longevity form one of the most promising techniques for continuous glucose monitoring. In the present study, we developed a novel nanoengineered microsphere formulation comprising alginate microsphere glucose sensors and anti-inflammatory-drug-loaded alginate microspheres. METHODS: The formulation was prepared and characterized for size, shape, in vitro drug release, biocompatibility, and in vivo acceptability. Glucose oxidase (GOx)- and Apo-GOx-based glucose sensors were prepared and characterized. Sensing was performed both in distilled water and simulated interstitial body fluid. Layer-by-layer self-assembly techniques were used for preventing drug and sensing chemistry release. Finally, in vivo studies, involving histopathologic examination of subcutaneous tissue surrounding the implanted sensors using Sprague-Dawley rats, were performed to test the suppression of inflammation and fibrosis associated with glucose sensor implantation. RESULTS: The drug formulation showed 100% drug release with in 30 days with zero-order release kinetics. The GOx-based sensors showed good enzyme retention and enzyme activity over a period of 1 month. Apo-GOx-based visible and near-infrared sensors showed good sensitivity and analytical response range of 0-50 mM glucose, with linear range up to 12 mM glucose concentration. In vitro cell line studies proved biocompatibility of the material used. Finally, both anti-inflammatory drugs were successful in controlling the implant-tissue interface by suppressing inflammation at the implant site. CONCLUSION: The incorporation of anti-inflammatory drug with glucose biosensors shows promise in improving sensor biocompatibility, thereby suggesting potential application of alginate microspheres as "smart tattoo" glucose sensors with increased functional longevity.