An attempt has been made in the present study to formulate soluble ocular inserts of aceclofenac to facilitate the bioavailability of the drug into the eye, as no eye drop solution could be formulated. Glycero-gelatin ocular inserts/films were prepared and physicochemical parameters and drug release profiles of glycerol-gelatin films of aceclofenac were compared with surface cross-linked films of similar compositions. Ocular irritation of the developed formulation was also checked by HET-CAM test and efficacy of the developed formulation against prostaglandin-induced ocular inflammation in rabbit eye was determined. The non-cross-linked films showed poor mechanical, physicochemical properties, and very little potential of sustaining drug release, however cross-linking the films enhanced tensile strength by 70%, but elasticity decreased by 95%. The cross-linked ocular inserts showed less swelling than non-cross-linked. Formulation AF8 (20% gelatin and 70% glycerin, treated by cross-linker for 1 h) demonstrated the longest drug release for 24 h. As per the kinetic models all films showed a constant drug release with Higuchi diffusion mechanism. Formulation was found to be practically non-irritant. The optimized formulation was tested and compared with eye drops of aceclofenac for anti-inflammatory activity in rabbits against PGE₂-induced inflammation. In vivo studies with developed formulation indicated a significant inhibition of PGE₂-induced PMN migration as compared to eye drops. In conclusion, ocular inserts of aceclofenac was found promising as it achieved sustained drug release and better pharmacodynamic activity.