The aim of the present study was to enhance the solubility and dissolution rate of poorly watersoluble drug Aceclofenac (BCS-class II) using its solid dispersions (SDs) with β-Cyclodextrin. Inclusion complex of Aceclofenac with β- Cyclodextrin was prepared by physical mixture, co-grinding and kneading method at 1:1 w/w ratio. It was clear that kneading method would be the best method for the preparation of inclusion complex of Aceclofenac with β-CD. Hence Kneading method was selected for further study (K1, K2, K3 & K4 in 1:0.5, 1:1, 1:1.5 & 1:2 ratios respectively).Phase solubility study was conducted to evaluated the effect of polymer on aqueous solubility of Aceclofenac. Solid state characterization was evaluated by Fouriertransform infrared spectroscopy (FTIR), and differential scanning calorimetry (DSC). In vitro dissolution study was performed in phosphate buffer at pH 6.8. In vitro dissolution rate of Aceclofenac from solid dispersion (SD) was significantly higher compared to pure Aceclofenac.