We have developed a new dexamethasone (Dex)-loaded poly(lactic-co-glycolic acid) microspheres/porous collagen scaffold composite for implantable glucose sensors. The scaffolds were fabricated around the sensing element of the sensors and crosslinked using nordihydroguaiaretic acid (NDGA). The microspheres containing Dex were incorporated into the NDGA-crosslinked collagen scaffold by dipping in microsphere suspension in either water or Pluronic. The loading efficiencies of Dex in the microspheres and the scaffold were determined using high performance liquid chromatography. The microspheres/scaffold composite fabricated using microspheres in the hydrogel solution had a better loading efficiency than when microspheres were in water suspension. The composite fabricated using the hydrogel also showed a slower and more sustained drug release than the standard microspheres in vitro during a 4 week study and did not significantly affect the function of the sensors in vitro. The sensors with the composite that were still functional retained above 50% of their original sensitivity at 2 weeks. Histology showed that the inflammatory response to the Dex-loaded composite was much lower than for the control scaffold at 2 and 4 weeks after implantation. The Dex-loaded composite system might be useful to reduce inflammation to implanted glucose sensors and therefore extend their function and lifetime.