Extended release formulation of tramadol hydrochloride (TRH) based on osmotic technology was developed and evaluated. Target release profile was selected and different variables were optimized to achieve it. Formulation variables such as the level of swellable polymer, plasticizer and the coat thickness of semipermeable membrane (SPM) were found to markedly affect drug release. TRH release was directly proportional to the levels of plasticizer but inversely proportional to the levels of swellable polymer and coat thickness of SPM. Drug release from developed formulations was independent of pH and agitation intensity but dependent on osmotic pressure of the release media.