The aim of the present study was to develop stable parenteral submicron lipid emulsions (SLEs) for sustained delivery of diclofenac acid, used to treat arthritic conditions, to minimize dosing frequency. The SLEs of diclofenac acid were prepared using soybean oil, egg lecithin, and cholesterol. They were heated and processed by homogenization and ultrasonication. The influence of formulation variables, such as the change in proportion of oil and cholesterol, were studied, and optimized formulations were developed. The stability of the optimized formulations SM-A (no cholesterol), SM-I (0.05% cholesterol), and SM-II (0.1% cholesterol) was studied during autoclaving, centrifugal stress, desorption stress (dilution effect), and on storage. The creaming volume percentage was found during the storage and centrifugal stress studies. The effect of dilution on zeta potential and size was noted in the desorption studies. The total drug content and entrapment efficiency was determined using high-performance liquid chromatography. In vitro release studies were performed in phosphate buffer using dialysis method for 12 h. The in vivo anti-inflammatory activity (reduction in paw volume of optimized SLEs) was tested in a 1% carrageenan-induced rat paw oedema model and compared with a diclofenac injection (Voveran). Stable SLEs of diclofenac were developed with a mean size ranging from 200-250 nm and a zeta potential of -31 +/- 1 mV. The cholesterol concentration did not significantly affect the prepared SLEs' size and zeta potential. The optimized formulations, SM-A, SM-I, and SM-II, were relatively stable during centrifugal stress, dilution stress, and storage. The drug content was found to be 2.45 +/- 0.26 mg/mL for SM-A, 2.46 +/- 0.34 mg/mL for SM-I, and 2.42 +/- 0.01 mg/mL for SM-II. The entrapment efficiency was 98.91 +/- 0.13%, 99.01 +/- 0.12%, and 99.27 +/- 0.1% for SM-A, SM-I and SM-II, respectively. The in vitro drug release was zero-order and the cumulative amount of drug released within 12 h was 80% (SM-A), 57% (SM-I), and 42% (SM-II. During in vivo studies, the optimized formulations initially revealed a sustained anti-inflammatory activity occurring up to 12 h, with a maximum activity occurring after 2 h. In the case of the diclofenac injection, the maximum activity persisted up to 5 h and then gradually decreased. No such decrease was noticed regarding the optimized formulations for a period extending up to 12 h. Beyond 12 h, activity persisted up to 24 h with a slight reduction in effect.