Interactions between endogenous cholesterol and cyclodextrins have been investigated by several researchers, and they found altered skin penetration of some drugs, membrane disruption, and extraction of cholesterol from the large lipoprotein particles or animal fat. In the present study, an inclusion complex composed of cholesterol and hydroxypropyl-beta-cyclodextrin (HPbetaCD) prepared by lyophilization was investigated and characterized in order to confirm these interactions. Five grams of cholesterol were dispersed in 50 ml of 73.2 mM HPbetaCD aqueous solution, mixed for 2 days, and the filtrate lyophilized. A phase solubility study was performed by mixing an excess amount of cholesterol with an aqueous solution containing increasing amounts of HPbetaCD. The amount of cholesterol in solution after mixing for 2 days at 25 degrees C was determined by HPLC. The inclusion complex was characterized by Fourier transform infrared spectroscopy (FTIR), X-ray diffractometry, and differential scanning calorimetry (DSC). An Ap-type Higuchi phase solubility diagram, DSC, FTIR, and X-ray diffraction demonstrated the formation of an inclusion complex. DSC thermograms indicated that the endothermic peaks of cholesterol and physical mixture of cholesterol with HPbetaCD due to the fusion of drug crystals, were absent in DSC thermograms obtained on the freeze dried inclusion complex. FTIR spectra indicated that some of the absorption peaks in the lyophilized inclusion complex were different from that of the physical mixture of cholesterol and HPbetaCD. X-ray diffraction patterns showed that the pure cholesterol and a physical mixture of cholesterol and HPbetaCD exhibited crystalline characteristics whereas the lyophilized inclusion complex and HPbetaCD displayed amorphous characteristics. The results indicated that the formation of a cholesterol/HPbetaCD inclusion complex is more water soluble than cholesterol alone.