The hypnotic glutethimide (GTI) is sparingly soluble and in the same time decomposes readily in alkaline solutions. Therefore, the inclusion complexation of GTI with heptakis (2,6-di-O-methyl)-beta-cyclodextrin (DMCD) was undertaken for improving its solubility and stability characteristics. Inclusion complexation of DMCD with GTI in aqueous solution and in solid phases was confirmed by the solubility method, X-ray diffractometry, nuclear magnetic resonance spectroscopy, infrared spectroscopy, and differential scanning calorimetry (DSC). The solubility curve of GTI-DMCD system was a typical A(L) type curve, and the apparent stability constant, K(c), was calculated from the slope and intercept of the solubility diagram as 631 M-1. The solid complexes of GTI with DMCD in 1 : 1 molar ratio were prepared by grinding and coprecipitation methods. The dissolution rate of GTI from the inclusion complex was much more rapid than that of the GTI alone since, after 10 min, the dissolved amount of GTI was about 8% while the corresponding amounts were 52, 78 and 97% for the physical mixture, ground mixture and coprecipiate, respectively. The enhanced dissolution may be due to the increase in solubility and decrease in crystallinity of the drug by the complexation, as expected from solubility study and X-ray diffractometry. The effect of DMCD on the alkaline hydrolysis of GTI was investigated at 30, 40 and 50-degrees-C. It was found that the degradation of GTI follows second-order kinetics in absence and presence of DMCD as is evident from the linear second-order plots. The inclusion with DMCD retards the decomposition in all cases. Stability constant, and rate constant of the complexes were determined kinetically on the basis of 1 : 1 inclusion complex formation.