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The low solubility and slow dissolution of hydrophobic drugs is a major challenge for the pharmaceutical industry. In this paper, we present the synthesis of surface-functionalized poly(lactic-co-glycolic acid) (PLGA) nanoparticles for incorporation into corticosteroid dexamethasone to improve its in vitro dissolution profile. The PLGA crystals were mixed with a strong acid mixture, and their microwave-assisted reaction led to a high degree of oxidation. The resulting nanostructured, functionalized PLGA (<i>nf</i>PLGA), was quite water-dispersible compared to the original PLGA, which was non-dispersible. SEM-EDS analysis showed 53% surface oxygen concentration in the <i>nf</i>PLGA compared to the original PLGA, which had only 25%. The <i>nf</i>PLGA was incorporated into dexamethasone (DXM) crystals via antisolvent precipitation. Based on SEM, RAMAN, XRD, TGA and DSC measurements, the <i>nf</i>PLGA-incorporated composites retained their original crystal structures and polymorphs. The solubility of DXM after <i>nf</i>PLGA incorporation (DXM–<i>nf</i>PLGA) increased from 6.21 mg/L to as high as 87.1 mg/L and formed a relatively stable suspension with a zeta potential of −44.3 mV. Octanol–water partitioning also showed a similar trend as the logP reduced from 1.96 for pure DXM to 0.24 for DXM–<i>nf</i>PLGA. In vitro dissolution testing showed 14.0 times higher aqueous dissolution of DXM–<i>nf</i>PLGA compared to pure DXM. The time for 50% (T₅₀) and 80% (T₈₀) of gastro medium dissolution decreased significantly for the <i>nf</i>PLGA composites; T₅₀ reduced from 57.0 to 18.0 min and T₈₀ reduced from unachievable to 35.0 min. Overall, the PLGA, which is an FDA-approved, bioabsorbable polymer, can be used to enhance the dissolution of hydrophobic pharmaceuticals and this can lead to higher efficacy and lower required dosage.