The present investigation demonstrates the effect of polymer and surfactant concentration on encapsulation efficiency along with testing and comparing the antiviral activity of Lamivudine microsphere with existing dosage forms. The O/O solvent evaporation method was used to prepare system in which Hydroxy propyl cellulose (HPMC) was used as release retarding polymer while Span 80 serves the function of surfactant. The statistical data was obtained using 32 full factorial design by selecting Polymer concentration (A), surfactant concentration (B) and encapsulation efficiency (Y1) as independent variables and dependent variables respectively. The interaction between polymer and drug was studied using FTIR spectra while surface morphology and physical nature of was characterized by FESEM and XRD analysis, respectively. The encapsulation efficiency was found to be in the range of 74.40% (F3) to 84.80% (F5) whereas DR values of formulated batches showed wide variation from 67.83% to 91% which can be stated as effect of concentration of polymer i.e. HPMC. The optimized formulation when tested on DHBV infected duckling was found to be greater in its DHBV inhibitory action (49.75% in 72 hr) when compared to plain drug (up to 32 hrs) and SR tablet dosage form (up to 48 hrs). This study had successfully demonstrated Lamivudine loaded sustained release microspheres using HPMC as potential drug delivery system for the treatment of Hepatitis-B.