In general, biomaterials induce a non-specific host response when implanted in the body. This reaction has the potential to interfere with the function of the implanted materials. One method for controlling the host response is through local, controlled-release of anti-inflammatory agents. Herein, we investigate the spatial and temporal effects of an anti-inflammatory drug on the cellular dynamics of the innate immune response to subcutaneously implanted poly(lactic-co-glycolic) microparticles. Noninvasive fluorescence imaging was used to investigate the influence of dexamethasone drug loading and release kinetics on the local and systemic inhibition of inflammatory cellular activities. Temporal monitoring of host response showed that inhibition of inflammatory proteases in the early phase was correlated with decreased cellular infiltration in the later phase of the foreign body response. We believe that using controlled-release anti-inflammatory platforms to modulate early cellular dynamics will be useful in reducing the foreign body response to implanted biomaterials and medical devices.