We report on the development and evaluation of methotrexate magnetic microcapsules (MMC) for targeted rheumatoid arthritis therapy. Methotrexate was loaded into CaCO3-PSS (poly (sodium 4-styrenesulfonate)) doped microparticles that were coated successively with poly (allylamine hydrochloride) and poly (sodium 4-styrenesulfonate) by layer-by-layer technique. Ferrofluid was incorporated between the polyelectrolyte layers. CaCO3-PSS core was etched by incubation with EDTA yielding spherical MMC. The MMC were evaluated for various physicochemical, pharmaceutical parameters and magnetic properties. Surface morphology, crystallinity, particle size, zeta potential, encapsulation efficiency, loading capacity, drug release pattern, release kinetics and AC susceptibility studies revealed spherical particles of ~3 µm size were obtained with a net zeta potential of +24.5 mV, 56% encapsulation and 18.6% drug loading capacity, 96% of cumulative drug release obeyed Hixson-Crowell model release kinetics. Drug excipient interaction, surface area, thermal and storage stability studies for the prepared MMC was also evaluated. The developed MMC offer a promising mode of targeted and sustained release drug delivery for rheumatoid arthritis therapy.