The aim of this study was to evaluate film-formation properties of a novel, organic solvent-free aqueous dispersion of potato starch acetate (SA; degree of substitution 2.8) and its ability to control drug release from a coated tablet. Initially, film-formation mechanisms and drug permeabilities of both organic solvent and dispersion-based SA free films (prepared by cast or spraying techniques) were investigated. The SA dispersion was suitable for the fluid-bed coating process, forming strong films with complete coalescent polymeric spheres. The model compounds predominantly permeated via the micro-pores of SA free films, which resulted from the leaching of water-soluble excipients from the dispersion. Thus, the permeation rate depended on the film structure rather than the physico-chemical properties of the penetrant. In the case of SA-coated tablet, drug release was sustained when the coating level was increased (from 12% to 20%, stated as a weight gain), and also as lipophilicity of the drug increased. When compared to the reference polymer dispersion (Surelease®), SA coatings showed better mechanical properties against the osmotic pressure caused by a hydrophilic core tablet. These results clearly demonstrate that SA dispersion has high utility as a novel aqueous coating material for controlled release products.