On demand release of anti-inflammatory drug or neurotropic factors have great promise for maintaining a stable chronic neural interface. Here we report the development of an electrically controlled drug release system based on conducting polymer and carbon nanotubes. Drug delivery research using carbon nanotubes (CNTs) has taken advantage of the ability of CNTs to load large amounts of drug molecules on their outer surface. However, the utility of the inner cavity of CNTs, which can increase the drug loading capacity, has not yet been explored. In this paper, the use of multi-wall CNTs as nanoreserviors for drug loading and controlled release is demonstrated. The CNTs are pretreated with acid sonication to open their ends and make their outer and inner surfaces more hydrophilic. When dispersed and sonicated in a solution containing the anti-inflammatory drug dexamethasone, experiments show that the pretreated CNTs are filled with the drug solution. To prevent the unwanted release of the drug, the open ends of the drug-filled CNTs are then sealed with polypyrrole (PPy) films formed through electropolymerization. The prepared electrode coating significantly reduced the electrode impedance, which is desired for neural recording and stimulation. More importantly, the coating can effectively store drug molecules and release the bioactive drug in a controlled manner using electrical stimulation. The dexamethasone released from the PPy/CNT film was able to reduce lipopolysaccharide induced microglia activation to the same degree as the added dexamethasone.