The purpose of the study was to investigate the effect of hydroxypropyl beta cyclodextrin (HPbetaCD) on aqueous solubility, stability, and in vitro corneal permeation of acyl ester prodrugs of ganciclovir (GCV). Aqueous solubility and stability of acyl ester prodrugs of Ganciclovir (GCV) were evaluated in pH 7.4 isotonic phosphate buffer solution (IPBS) in the presence and absence of HPbetaCD. Butyryl cholinesterase-mediated enzymatic hydrolysis of the GCV prodrugs was studied using various percentage w/v HPbetaCD. In vitro corneal permeation of GCV and its prodrugs (with and without 5% HPbetaCD) across isolated rabbit cornea was studied using side-by-side diffusion cells. HPbetaCD-prodrug complexation was of the A(L) type with values for complexation constants ranging between 12 and 108 M(-1). Considerable improvement in chemical and enzymatic stability of the GCV prodrugs was observed in the presence of HPbetaCD. The stabilizing effect of HPbetaCD was found to depend on the degree of complexation and the degradation rate of prodrug within the complex. Five percent w/v HPbetaCD was found to enhance the corneal permeation of only the most lipophilic prodrug GCV dibutyrate (2.5-fold compared with 0% HPbetaCD). All other prodrugs showed little or no difference in transport in the presence of 5% w/v HPbetaCD. Agitation in the donor chamber largely influenced the transport kinetics of GCV dibutyrate across cornea. Results indicate the presence of an unstirred aqueous diffusion layer at the corneal surface that restricts the transport of the highly lipophilic GCV dibutyrate prodrug. HPbetaCD improves corneal permeation by solubilizing the hydrophobic prodrug and delivering it across the mucin layer at the corneal surface.