The purpose of this study was to increase the solubility of furosemide (FR) with inclusion compound of beta-cyclodextrin (beta-CD). The interaction between FR and beta-CD in solution was studied by the solubility method. The phase solubility studies reveal a Bs-type diagram with an inclusion complex of 1:1 molar ratio and a stability constant of 823.5 M(-1). The solid complexes of FR with beta-CD were prepared by using freeze-drying, kneading, and co-precipitation methods. In addition, the physical mixture was prepared for comparison. Inclusion complexation was confirmed by the results from the studies of x-ray diffraction, differential scanning calorimetry, and infrared spectroscopy. The rates of release of the active material from the resulting complexes were determined from dissolution studies using the flow-through cell method. The dissolution rate of FR was significantly enhanced by inclusion of the beta-CD in the formulations. The rate of release of the active material was found to be dependent on the preparation method of the complexes, and the drug prepared by the kneading method was shown to have the fastest dissolution profile compared to the other methods used in this study.