Most of the floating systems have an inherent drawback of high variability in the GI transit time, invariably affecting the bioavailability of drug. An attempt has been made to develop floating drug delivery system for improving the drug bioavailability by prolongation of gastric residence time of famotidine in stomach. The floating microballoons were prepared using polymer Eudragit L-100 by solvent evaporation and diffusion technique. The prepared famotidine loaded microspheres were characterised for drug loading, entrapment, encapsulation efficiency, particle size distribution, surface morphology, differential scanning calorimetry, test for buoyancy, in-vitro release and in-vivo antiulcer studies. The results showed an increased drug loading, encapsulation and entrapment efficiency. The thermogram of the DSC showed that the drug was encapsulated in amorphous form and SEM studies revealed the discrete, spherical shaped spheres with rough surface and presence of holes on floating microspheres due high entrapment of PEG which are responsible for drug release and floating ability. The sizes of spheres were found between 20-120 microm which exhibited prolonged release (In-vitro > 8 h) and remained buoyant for > 10 h. The mean particle size increased and the drug release rate decreased at higher Eudragit L-100 polymer concentration. The in-vivo results showed significant antiulcer property of famotidine loaded microspheres when compared to control and standard group of rats by using pyloric ligation method. The mean volume of gastric secretion, mean pH and mean total acid for formulation treated group was calculated as 3.45+/-0.88 ml, 5.65+/-0.74, and 114.15+/-1.80 mEq/L respectively.