The solubilization and amorphization of the poorly water soluble nonsteroidal antiinflammatory drug, Etodolac (ETD) with a hydrophilic polymer, low molecular weight chitosan (CHT), have investigated. Phase solubility studies were carried out to obtain an insight on the nature of a possible interaction between ETD and CHT in solution. Binary systems of varying drug polymer ratios were prepared using different techniques namely physical mixing, cogrinding and kneading. Drug__ampersandsignndash;polymer interactions were investigated in solid stateby differential scanning calorimetry, powder X-ray diffractometry and scanning electron microscopy. The results obtained indicated loss of drug crystallinity. Dissolution rate studies revealed that the drug dissolution was improved with increasing the polymer concentration in the mixture in the following order kneading__ampersandsigngt; co-grinding__ampersandsigngt; physical mixing __ampersandsigngt; pure drug. The prepared capsules containing the binary mixture prepared by kneading in the drug-polymer ratio of 1:19 were coated with guar gum (a film coating material) and their dissolution rates were tested in comparison with commercial capsules present in the Egyptian market. A coating of 10 layers of guar gum prevented the release of etodolac in the acidic pH and permitted its release in colonic environment.