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We present the development, characterization and in vivo validation of a novel drug eluting coating that has been applied to flexible neural probes. The coating consists of drug eluting nanoparticles loaded with an anti-inflammatory drug embedded in a biodegradable polymer. The drug eluting coating is applied to flexible polymer neural probes with platinum electrodes. The drug eluting device is implanted in one hemisphere of a rat, while a control device is implanted in the opposite hemisphere. Impedance measurements are performed to determine the effect of the drug eluting coating on the tissue reaction surrounding the probe and the electrical characteristics of the devices. Probes that are coated with drug eluting coatings show better long term impedance characteristics over control probes. These coatings can be used to increase the reliability and long term success of neural prostheses.