Nasal cavity has used as alternative route for the drugs with poor water solubility, susceptible to acidic or enzymatic degradation and hepatic metabolism. The objective of the present study was to improve solubility of sertraline hydrochloride (STH), formulate microemulsions containing STH to accomplish rapid onset of action and to bypass the first-pass metabolism. A microemulsion system with Capmul MCM as oil phase, Labrasol as surfactant and Transcutol P as cosurfactant was developed for intranasal delivery of STH. Phase behaviour and solubilization capacity of the developed microemulsion system were characterized and STH microemulsions (SME) were prepared by titration method and evaluated for globule size, drug content, nasal ciliotoxicity, percentage transmittance, pH and viscosity. invitro studies for nasal absorption were carried out on goat nasal mucosa. The drug shows a high solubility of 117 mg/ml in a microemulsion containing 22.2% Capmul MCM, 44.5% (w/w) surfactant/cosurfactant (Labrasol: Transcutol P at 2:1) and 33.3% H2O. In invitro studies the nasal absorption was found to be 66.07±0.78% from SME2. These results indicate that intranasal microemulsion of STH may be beneficial for the treatment of depression.