Cyclorins, hydrophilic carriers, are cyclic polysaccharides which have property of forming inclusion complex with various guest molecules with suitable polarity and dimensions. They have been used extensively for solubility enhancement of hydrophobic drug/water insoluble drugs. Diacerein is anthraquinone compound designed to treatment of osteoarthritis. The purpose of this research was to enhance the solubility and therefore dissolution of Diacerein by complexation with β-cyclodextrin (βCD) and hydroxyl propyl β-cyclodextrin (HP βCD).This study represents the formulation of inclusion complex with βCD and HP βCD by kneading method and their characterization and evaluation of improvement in dissolution profile. Inclusion complex compared to pure drug and physical mixtures, remarkable enhancement in invitro drug release profile in PH 6.8 phosphate buffer was obtained in both inclusion complexes of βCD and HP βCD, especially with HP βCD. Complexation of Diacerein with hydrophilic carriers like βCD and HP βCD offers a major enhancement in drug solubility.