Luteolin (LT) is a poorly soluble bioactive compound that suffered bioavailability problems after oral administration. Hence, the aim of the proposed research work was to formulate and investigate various solid dispersions (SDs) of LT in order to enhance its dissolution and bioactivity. LT-SD was prepared using polyethylene glycol 4000 (PEG 4000) as a carrier at the mass ratios of 1:1, 1:2, and 1:4. LT-SD was prepared using different methods including fusion (FU), solvent evaporation (SE), and microwave irradiation (MI) methods. The prepared LT-SD was duly characterized in terms of differential scanning calorimetry (DSC), X-ray diffraction (XRD), scanning electron microscopy (SEM), infrared (IR) spectroscopy, and nuclear magnetic resonance (NMR) and evaluated for dissolution and in vitro antioxidant activity. The results of DSC, XRD, SEM, IR, and NMR suggested the formation of LT-SD. After 90 min of the dissolution study, the results displayed that the % release of LT from prepared SD was significantly higher compared with the pure LT and its physical mixture dispersion (PMD). LT-SD prepared using the MI method displayed the maximum release of LT (i.e., 97.78 ± 4.41%) at a 1:2 mass ratio of LT:PEG 4000. The LT-SD prepared using the SE method displayed the maximum release of 93.78 ± 3.98% at a mass ratio of 1:4 of LT:PEG 4000. The SD prepared by the MI method showed enhanced dissolution due to higher aqueous solubility and the reduction of particle size. The solid-state characterization studies (DSC, XRD, SEM, IR, and NMR studies) suggested the morphological conversion of LT into the amorphous form from the crystalline state. The results of the antioxidant study revealed that the formation LT-SD displayed significantly higher radical scavenging activity than the pure LT. Therefore, SD obtained using PEG 4000 could be a potential strategy for maximizing the solubility, in vitro dissolution, and therapeutic efficacy of LT.