Sulindac is not soluble in water and causes disorders in the gastrointestinal tract. In order to improve its solubility in water and enhance the dissolution rate, an attempt was made to prepare the physical mixture (PM) and solid dispersion (SD) of sulindac with skimmed milk (SM) and these forms were investigated in terms of physicochemical characteristics. Enhancement of solubility of sulindac was achieved by preparing its SD with SM which can be used due to its surface active agents and amino acid contents and also to cure gastric disturbance. Lyophilization technique was used to prepare the SD. Differential scanning calorimetry (DSC), X-ray powder diffraction and scanning electron microscopic (SEM) analysis elucitated the formation of water-soluble complex between sulindac and SM. Results of the solubility test indicated that SD of sulindac with SM showed almost 11 times the solubility of the plain drug. Data obtained from the dissolution rate determination studies also revealed that in SD form with SM the rate was faster and higher than the PM and the plain drug which has not shown any dissolution.