<PAGE>   1

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q
(Mark One)

[X]    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES 
       EXCHANGE ACT OF 1934.

For the quarterly period ended               September 30, 1997
                               ---------------------------------------------

[ ]    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES 
       EXCHANGE ACT OF 1934

         For the transition period from                 to 
                                         -------------      -------------

                        Commission file Number: 0-18338

                               I-Flow Corporation
-------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

           California                                33-0121984
-------------------------------------------------------------------------------
(State or other jurisdiction of           (I.R.S. Employer Identification No.)
incorporation or organization)

20202 Windrow Drive Lake Forest, CA                     92630
-------------------------------------------------------------------------------
(Address of principal executive offices)              (Zip Code)

                                 (714) 206-2700
-------------------------------------------------------------------------------
              (Registrant's telephone number, including area code)


-------------------------------------------------------------------------------
              (Former name, former address and former fiscal year,
                         if changed since last report)

         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. [ x ] Yes [ ] No

                APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
                   PROCEEDINGS DURING THE PRECEDING FIVE YEARS

         Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.

                                                       [  ] Yes  [   ] No

                      APPLICABLE ONLY TO CORPORATE ISSUERS:

         Indicate the number of shares outstanding of each of the issuer's
classes of common stock as of the latest practicable date.

         As of September 30, 1997, there were 12,286,689 shares
         outstanding of Common Stock and 656,250 shares outstanding of
         Series B Preferred Stock.




<PAGE>   2


                               I-FLOW CORPORATION
                                    FORM 10-Q
                    FOR THE QUARTER ENDED SEPTEMBER 30, 1997

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>

                                                                                                             Page
                                                                                                             ----
<S>                                                                                                          <C>
       Part I:    Financial Information

                  Item 1.  Financial Statements

                  Consolidated Balance Sheets as of September 30, 1997 (Unaudited)
                     and December 31, 1996                                                                     3

                  Consolidated Statements of Operations for the three and nine-month
                     periods ended September 30, 1997 and 1996 (Unaudited)                                     4

                  Consolidated Statements of Cash Flows for the nine-month periods
                     ended September 30, 1997 and 1996 (Unaudited)                                             5

                  Notes to Consolidated Financial Statements                                                   6

                  Item 2.  Management's Discussion and Analysis of Financial Condition
                           and Results of Operations                                                           8

                  Item 3.  Quantitative and Qualitative Disclosures about Market Risk                         10

       Part II:   Other Information                                                                           11

                  Signatures                                                                                  12
</TABLE>




                                       2


<PAGE>   3
                               I-FLOW CORPORATION
                          CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                      September 30,       December 31,
                                                                                          1997               1996
                                                                                      -------------       -----------
ASSETS                                                                                 (Unaudited)
------
<S>                                                                                  <C>                  <C>
  CURRENT ASSETS:
    Cash and cash equivalents                                                         $     353,000      $  1,651,000
    Royalty receivable                                                                           --         1,000,000
    Accounts receivable, net                                                              5,694,000         3,514,000
    Inventories                                                                           4,121,000         3,352,000
    Prepaids and other                                                                      237,000           141,000
                                                                                      -------------      ------------ 
       Total current assets                                                              10,405,000         9,658,000
                                                                                      -------------      ------------ 

PROPERTY:
    Furniture, fixtures and equipment                                                     4,053,000         3,264,000
    Less accumulated depreciation                                                       (1,774,000)        (1,326,000)
                                                                                      -------------      ------------ 
       Property, net                                                                      2,279,000         1,938,000
                                                                                      -------------      ------------ 

OTHER ASSETS
    Goodwill and other intangibles, net                                                   4,103,000         4,831,000
    Notes receivable and other                                                            1,208,000           807,000
                                                                                      -------------      ------------ 
TOTAL                                                                                 $  17,995,000      $ 17,234,000
                                                                                      =============      ============ 


LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------

CURRENT LIABILITIES:
    Accounts payable                                                                  $   1,415,000      $  1,156,000
    Accrued payroll and related expenses                                                    675,000         1,271,000
    Deferred revenue                                                                         62,000           429,000
    Current portion of long-term debt                                                     1,000,000         1,000,000
    Borrowings under line-of-credit                                                       1,000,000                --
    Restructuring reserve                                                                        --           824,000
    Other liabilities                                                                            --            73,000
                                                                                      -------------      ------------ 
       Total current liabilities                                                          4,152,000         4,753,000
                                                                                      -------------      ------------ 

LONG-TERM DEBT                                                                            1,747,000         2,500,000
LONG-TERM RESTRUCTURING RESERVE                                                                  --           384,000
COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY:
    Preferred stock - no par value; 5,000,000 shares authorized; 656,250 series
      B shares issued and outstanding at September 30, 1997 and December 31,
      1996, respectively (aggregate
      preference on liquidation is $1,575,000)                                            1,494,000         1,494,000
    Common stock - no par value; 40,000,000 shares
      authorized; 12,286,689 and 12,050,076 shares
      issued and outstanding at September 30, 1997 and
      December 31, 1996, respectively                                                    33,719,000        33,036,000
    Common stock warrants                                                                   615,000           615,000
    Accumulated deficit                                                                (23,732,000)       (25,548,000)
                                                                                      -------------      ------------ 
       Net shareholders' equity                                                          12,096,000         9,597,000
                                                                                      -------------      ------------ 
TOTAL                                                                                 $  17,995,000      $ 17,234,000
                                                                                      =============      ============ 
</TABLE>

See accompanying notes to consolidated financial statements




                                       3
<PAGE>   4

                               I-FLOW CORPORATION
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                   Three Months Ended               Nine Months Ended
                                                      September 30,                   September 30,
                                               ---------------------------      --------------------------
                                                   1997            1996            1997           1996
                                               -----------     -----------      -----------    -----------
<S>                                            <C>             <C>              <C>            <C>
REVENUE:
  Net sales                                    $ 4,705,000     $ 2,965,000      $14,068,000    $ 4,695,000
  Licensing fees                                        --       1,000,000               --      3,600,000
                                               -----------     -----------      -----------    -----------
    Total revenue                                4,705,000       3,965,000       14,068,000      8,295,000
                                               -----------     -----------      -----------    -----------

COSTS AND EXPENSES:
  Cost of sales                                  2,085,000       1,140,000        5,891,000      2,045,000
  Selling and marketing                            827,000         824,000        2,448,000      1,556,000
  General and administrative                       807,000         982,000        2,724,000      2,259,000
  Product development                              209,000         334,000          813,000        804,000
  In-process research and development                            4,900,000                       4,900,000
                                               -----------     -----------      -----------    -----------
    Total costs and expenses                     3,928,000       8,180,000       11,876,000     11,564,000

Income (loss) before interest and taxes            777,000      (4,215,000)       2,192,000     (3,269,000)
Interest income (expense)                          (69,000)        (10,000)        (212,000)       173,000
Income taxes                                       (29,000)             --          (67,000)       (35,000)
                                               -----------     -----------      -----------    -----------
NET INCOME (LOSS)                              $   679,000     $(4,225,000)     $ 1,913,000    $(3,131,000)
                                               ===========     ===========      ===========    ===========

NET INCOME (LOSS) PER SHARE                    $      0.05     $     (0.34)     $      0.14    $     (0.28)
                                               -----------     -----------      -----------    -----------
WEIGHTED AVERAGE COMMON AND
  COMMON EQUIVALENT SHARES
  OUTSTANDING                                   13,842,053      11,569,690       13,736,416     11,225,418
                                               -----------     -----------      -----------    -----------
</TABLE>



See accompanying notes to consolidated financial statements






                                       4


<PAGE>   5
                               I-FLOW CORPORATION
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (UNAUDITED)

<TABLE>
<CAPTION>

                                                                                            Nine Months Ended
                                                                                               September 30,
                                                                                      --------------------------------
                                                                                         1997                1996
                                                                                      -----------         ------------
<S>                                                                             <C>                  <C>
CASH FLOWS FROM OPERATING ACTIVITIES:

Net income (loss)                                                                     $ 1,913,000         $ (3,131,000)
Adjustments to reconcile net income (loss)
  to net cash provided by operations:
   In-process research and development                                                         --            4,900,000
  Depreciation and amortization                                                         1,176,000              172,000
  Changes in operating assets and liabilities:
    Royalty receivable                                                                  1,000,000                   --
    Accounts receivable                                                                (2,180,000)             602,000
    Inventories                                                                          (769,000)             (52,000)
    Prepaid expenses and other                                                            (96,000)            (120,000)
    Accounts payable, accrued and other liabilities                                    (2,082,000)             653,000
                                                                                      -----------         ------------
Net cash provided by (used by) operating activities                                    (1,038,000)           3,024,000
                                                                                      -----------         ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Property acquisitions (including rental and
    demonstration equipment)                                                             (789,000)            (466,000)
  Business acquisition                                                                                     (16,036,000)
  Change (increase) in notes receivable                                                  (401,000)            (147,000)
                                                                                      -----------         ------------
Net cash used by investing activities                                                  (1,190,000)         (16,649,000)
                                                                                      -----------         ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Increase (payments) on notes payable                                                   (753,000)           3,947,000
  Proceeds from borrowings on line of credit                                            1,000,000
  Proceeds from exercise of stock options and warrants                                    683,000            5,574,000
                                                                                      -----------         ------------
Net cash provided by financing activities                                                 930,000            9,521,000
                                                                                      -----------         ------------

NET DECREASE IN CASH AND CASH EQUIVALENTS                                              (1,298,000)          (4,104,000)

CASH AND CASH EQUIVALENTS AT BEGINNING OF
  PERIOD                                                                                1,651,000            5,628,000
                                                                                      ===========         ============
CASH AND CASH EQUIVALENTS AT END OF PERIOD                                            $   353,000         $  1,524,000
                                                                                      ===========         ============
</TABLE>



See accompanying notes to consolidated financial statements






 
                                        5
<PAGE>   6



                               I-FLOW CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                   (Unaudited)

1.    BASIS OF PRESENTATION

         The accompanying unaudited consolidated financial statements
         contain all adjustments (consisting only of normal recurring
         adjustments) which, in the opinion of management, are necessary to
         present fairly the financial position of the Company at September 30,
         1997 and the results of its operations and its cash flows for the
         nine-month periods ended September 30, 1997 and 1996. Certain
         information and footnote disclosures normally included in financial
         statements have been condensed or omitted pursuant to rules and
         regulations of the Securities and Exchange Commission although the
         Company believes that the disclosures in the financial statements are
         adequate to make the information presented not misleading.

         The financial statements included herein should be read in
         conjunction with the financial statements of the Company, included in
         the Company's Annual Report on Form 10-K for the year ended December
         31, 1996 filed with the Securities and Exchange Commission on March 31,
         1997.

         Certain amounts previously reported have been reclassified to
         conform with the presentation at September 30, 1997.


2.    BANK FINANCING

         The Company has a financing agreement with a bank which
         provides for a working capital line of credit of $4,000,000 expiring in
         July 1998.


3.    EARNINGS PER SHARE

         In 1997, earnings per share is based on the modified treasury
         stock method. Under this method, earnings per share is based on the
         weighted average number of common shares outstanding during the year,
         the assumed exercise of all options and warrants, the use of proceeds
         of such assumed exercises to acquire 20% of the common stock with any
         remaining proceeds being used to retire Company debt.





                                       6


<PAGE>   7




4.     RECENT ACCOUNTING PRONOUNCEMENTS


         Statement of Financial Accounting Standards No. 128 (FAS 128),
         "Earnings Per Share (EPS)", was issued in February 1997. Under FAS 128,
         the Company will be required to disclose basic EPS and diluted EPS for
         all periods for which an income statement is presented, which will
         replace disclosure currently being made for primary EPS and
         fully-diluted EPS. FAS 128 requires adoption for fiscal periods ending
         after December 15, 1997. Pro forma disclosures of basic EPS and diluted
         EPS for the current reporting and comparable periods in the prior year
         are as follows:


<TABLE>
<CAPTION>
                                                    Three Months Ended                       Nine Months Ended
                                                       September 30,                           September 30,
                                                 1997                1996                1997                1996
                                                 ----                ----                ----                ----
          <S>                                   <C>                <C>                   <C>             <C>
           Earnings Per Share:
             Basic                              $0.05               $(0.34)              $0.15             $(0.28)
             Diluted                            $0.05               $(0.34)              $0.14             $(0.28)
</TABLE>





                                       7



<PAGE>   8



         ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                  CONDITION AND RESULTS OF OPERATIONS


         Certain disclosures made by the Company in this report and in other
         reports and statements released by the Company are and will be
         forward-looking in nature, such as comments which express the Company's
         opinions about trends and factors which may impact future operating
         results. Disclosures which use words such as the Company "believes,"
         "anticipates," or "expects" or use similar expressions are intended to
         identify forward-looking statements. Such statements are subject to
         certain risks and uncertainties which could cause actual results to
         differ from those expected and readers are cautioned not to place undue
         reliance on these forward-looking statements. The Company undertakes no
         obligation to republish revised forward-looking statements to reflect
         the occurrence of unanticipated events. Readers are also urged to
         carefully review and consider the various disclosures made by the
         Company in this report which seek to advise interested parties of the
         risks and other factors that affect the Company's business, as well as
         in the Company's periodic reports on Forms 10-K, 10-Q, and 8-K filed
         with the Securities and Exchange Commission. The risks affecting the
         Company's business include reliance on the success of the Home Health
         Care Industry, the reimbursement system currently in place, competition
         in the industry, technological changes and product availability. Any
         such forward-looking statements, whether made in this report or
         elsewhere, should be considered in context with the various disclosures
         made by the Company about its business.

RESULTS OF OPERATIONS

         Net sales during the three and nine-month periods ended September 30,
         1997 were $4,705,000 and $14,068,000, respectively, compared to
         $2,965,000 and $4,695,000 for the same periods in the prior year.
         During the three and nine-month periods ended September 30, 1996, the
         Company also received licensing fees of $1,000,000 and $3,600,000,
         respectively which brought total revenues for these periods to
         $3,965,000 and $8,295,000, respectively. The increase in net sales for
         the three and nine-month periods ended September 30, 1997 was primarily
         due to sales of products from Block Medical, Inc. ("Block") of
         approximately $3,200,000 and $10,000,000, respectively. Block was
         acquired by the Company on July 22, 1996.

         Notwithstanding the year-to-year increase, net sales for the quarter
         were less than anticipated due to lower than forecasted sales from one
         of the Company's primary international distributors. This distributor
         is currently undergoing certain changes within its internal
         organization and seeking to finalize the acquisition of a major
         European homecare company. These changes within the distributor have
         created a shortfall in current sales to the distributor that may
         continue through at least the 



                                       8


<PAGE>   9


         remainder of this year. Management believes, however, that these
         efforts by the distributor will ultimately increase the sales of I-Flow
         products into the European market.

         In March 1996, SoloPak Pharmaceuticals, Inc. ("SoloPak") purchased the
         exclusive right and license to manufacture and sell certain of the
         Company's products in the United States and Puerto Rico. Pursuant to
         the agreement, SoloPak paid the Company $1.3 million in consideration
         of the license in March 1996 and guaranteed royalties of $1.0 million
         during each of the three succeeding quarters in 1996. Additionally,
         SoloPak will pay I-Flow a royalty equal to two percent of SoloPaks' net
         sales of the products for the 1997 and 1998 calendar years. Royalties
         due for the quarter ended September 30, 1997 were not significant. Per
         the terms of the agreement, I-Flow has the right of first refusal to
         supply SoloPak with services and assistance in assembling the products
         until February 1998. The Company retained the right to sell the
         products outside the United States and Puerto Rico.

         Cost of sales of $2,085,000 and $5,891,000 were incurred during the
         three and nine-month periods ended September 30, 1997, respectively. As
         a percentage of net sales, cost of sales were relatively unchanged
         compared to the same periods in the prior year.

         Selling and marketing expenses for the three-month period ended
         September 30, 1997 were consistent with those for the same period in
         the prior year. Selling and marketing expenses for the nine-month
         period ended September 30, 1997 increased over the same period in the
         prior year by $892,000, or 57%. This increase for the nine-month period
         is primarily a result of an increase in the internal sales force which
         increased from four to 15 people as a result of the acquisition of
         Block in July 1996.

         General and administrative expenses for the three-month period ended
         September 30, 1997 decreased $175,000 or 18% from the same period in
         the prior year due to the consolidation of the operations of Block into
         the operations of the Company. These expenses primarily represent costs
         for administrative personnel, facilities and other administrative items
         which management has made continuous efforts to reduce since the
         acquisition of Block. General and administrative expenses for the
         nine-month period ended September 30, 1997 increased over the same
         period in the prior year by $465,000, or 21%. This increase was
         primarily the result of the acquisition of Block in July 1996 and thus
         the duplication of facilities and certain personnel in the early months
         following the acquisition.

         Product development expenses for the three-month period ended September
         30, 1997 decreased over the same period in the prior year by $125,000,
         or 37% and remained relatively stable for the nine-month period ended
         September 30, 1997 compared to the same period in the prior year. With
         the acquisition of Block, the Company increased its engineering staff
         but has since decreased the overall engineering costs by consolidating
         the Block engineering efforts with its own. The

                                       9


<PAGE>   10


         Company will continue to incur product development expenses as it
         continues its efforts to introduce new improved-technology,
         cost-efficient products into the market.


FINANCIAL CONDITION

         During the nine-month period ended September 30, 1997, funds of
         $1,038,000 were used by operating activities consisting of net income
         of $1,913,000 plus non-cash expenses of $1,176,000 less net changes in
         operating assets and liabilities of $4,127,000. These changes in
         operating assets and liabilities consisted of: (1) a decrease in
         royalties receivable of $1,000,000, less (2) a net increase in accounts
         receivable of $2,180,000 due to the increase in net sales, (3) an
         increase in inventories, prepaid expenses and other of $865,000 due to
         the growth in the Company's operations and (4) a reduction in accounts
         payable and other liabilities of $2,082,000 due to a decrease in
         accrued payroll related expenses based on a reduction in the number of
         personnel and due to the payment of 1996 year-end bonuses in February
         1997.

         The Company recorded a restructuring charge of $1,552,000 at December
         31, 1996 to provide for expenses related to consolidating Block's
         operations with its own in 1997. The restructuring charge was comprised
         of expenses for severance, relocation, moving and lease abandonment.
         During the nine-month period ended September 30, 1997 charges to the
         restructuring reserve were made for such costs, there was no reserve
         balance remaining as of September 30, 1997 and no further charges are
         expected to occur.

         The Company used funds for investing activities during the nine-month
         period ended September 30, 1997 by acquiring leasehold improvements,
         furniture, fixtures, equipment and other assets aggregating $1,190,000
         for use in its operations.

         During the nine-month period ended September 30, 1997, funds of
         $930,000 were provided by financing activities consisting primarily of
         proceeds from borrowings on the line of credit and the exercise of
         stock options and warrants net of payments on notes payable.

         As of September 30, 1997, the Company had cash funds of $353,000 and
         net receivables of $5,694,000. To date, the Company has financed its
         operations and working capital requirements primarily through equity
         financings and bank borrowings. Management believes the Company's funds
         are sufficient to provide for its projected needs for operations for
         the next fiscal year.


Item 3.  Quantitative and Qualitative Disclosures about
         Market Risk.    -  Not Applicable



                                       10

<PAGE>   11




                           PART II - OTHER INFORMATION

         Items 1. - 5.     Not Applicable

         Item   6.         Exhibits and Reports on Form 8-K

                            (a) Exhibits - (See Index to Exhibits)

                            (b)     During the quarter ended September 30, 1997,
                                    the Company filed no Current Reports on Form
                                    8-K.





                                       11



<PAGE>   12




                                   SIGNATURES





         Pursuant to the requirements of the Securities Exchange Act of 1934,
         the Registrant has duly caused this Report to be signed on its behalf
         by the undersigned thereunto duly authorized.


                                                 I-FLOW CORPORATION
                                                 ------------------
                                                     (Registrant)





         Date:  November 12, 1997            /s/ Donald M. Earhart
                                             ----------------------------------
                                             Donald M. Earhart,
                                             Chairman, President and CEO



         Date:  November 12, 1997            /s/ Gayle L. Arnold
                                             ----------------------------------
                                             Gayle L. Arnold,
                                             Vice President, Finance, 
                                             Chief Financial Officer





                                       12

<PAGE>   13

                                INDEX TO EXHIBITS

     Set forth below is a list of the exhibits included or incorporated by
reference as part of this report:

     Exhibit No.      Exhibit
     -----------      -------
       3.1 (1)        Restated Articles of Incorporation of the Company
       3.2 (2)        Certificate of Amendment to Restated Articles of 
                      Incorporation dated June 14, 1991
       3.3 (3)        Certificate of Amendment to Restated Articles of 
                      Incorporation dated May 12, 1992
        27            Financial Data Schedule


      (1)   Incorporated by reference to exhibit with this title filed with the
            Company's Form 10-K for its fiscal year ended September 30, 1990.

      (2)   Incorporated by reference to exhibit with this title filed with the
            Company's Registration Statement (#33-41207-LA) declared effective
            August 8, 1991.

      (3)   Incorporated by reference to exhibit with this title filed with the
            Company's Post Effective Amendment to its Registration Statement
            (#33-41207-LA) declared effective November 6, 1992.




                                       13