Efficient cytoplasmic delivery of therapeutic agents is especially important for drugs with an intracellular site of action for elicitation of a maximal therapeutic effect. In this study, we demonstrate the efficacy of biodegradable nanoparticles for cytoplasmic delivery of dexamethasone, a glucocorticoid, whose site of action is intracellular. Equal doses of two formulations of drug-loaded nanoparticles releasing different doses of the encapsulated drug were tested for antiproliferative activity in vascular smooth muscle cells. The antiproliferative activity of the drug was significantly greater and sustained with nanoparticles that released a higher dose of the drug than with nanoparticles which released a lower dose of the drug. The greater antiproliferative activity of the nanoparticles that released a higher dose of the drug correlated with sustained and higher intracellular drug levels. The antiproliferative activity of the drug in solution was lower and relatively transient compared to that with drug-loaded nanoparticles. The mechanism of inhibition of cell proliferation was mediated through inhibition of cell-cycle progression with a relatively higher percentage of cells in the G0/G1 arrest phase in the group that was treated with drug-loaded nanoparticles compared to that treated with the drug in solution. Results of the study thus suggest that the dose and duration of a drug's availability at the intracellular site of action determine its therapeutic efficacy. In conclusion, biodegradable nanoparticles could be used as an effective delivery mechanism for sustained intracellular delivery of different therapeutic agents.