Drug eluting coatings, composed of drug in a polymer matrix, represent combination medical products that incorporate controlled release technologies with traditional devices to improve functionality and performance. The coating microstructure, which depends on the constituents and manufacturing conditions, can have a profound affect on drug release and, therefore, the ability of coated devices to function successfully. We have developed a diffuse interface model to predict microstructure development during coating fabrication and the impact of microstructure on subsequent release kinetics. We find our calculations are consistent with experimental observations and the basic model can be extended to account for crystallization, chemical bonding between constituents, and biodegradation. Thus, the model provides a tool to determine the relationships between materials and manufacturing variables, microstructure, and performance. Establishing these relationships can reduce empiricism in product and process design, providing an efficient means to tailor the microstructure to achieve a desired drug release behavior.