A stability-indicating HPLC method was developed and validated for the quantitative determination of diacerein in capsule dosage forms. An isocratic separation was achieved using a perfectsil target ODS-3, 250x4.6 mm i.d., 5 microm particle size columns with a flow rate of 1 ml/min and using a UV detector to monitor the eluate at 254 nm. The mobile phase consisted of phosphate buffer:acetonitrile (40:60, v/v) with pH 4.0 adjusted with phosphoric acid. The drug was subjected to oxidation, hydrolysis, photolysis and thermal degradation. Diacerein was found to degrade in acidic, basic, and oxidative stress and also under neutral condition. Complete separation of degraded products was achieved from the parent compound. All degradation products in an overall analytical run time of approximately 10 min with the parent compound diacerein eluting at approximately 4.9 min. The method was linear over the concentration range of 1-10 microg/ml (r(2) = 0.9996) with a limit of detection and quantitation of 0.01 and 0.05 microg/ml respectively. The method has the requisite accuracy, selectivity, sensitivity, precision and robustness to assay diacerein in capsules. Degradation products resulting from the stress studies did not interfere with the detection of diacerein and the assay is thus stability-indicating.