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The objective of the present work was to enhance the solubility and dissolution of practically water-insoluble drug raloxifene HCl (RLX), for the same two approaches that were used. In the first approach, drug was kneaded with hydroxypropyl-β-cyclodextrin (HPβCD), and in the second one drug was cogrinded with modified guar gum (MGG). The drug-cyclodextrin complex and drug-MGG cogrind mixtures were characterized by differential scanning calorimetry, X-ray diffraction studies, scanning electron microscopy, and Fourier transform infrared spectroscopy. The solubility and dissolution study reveals that solubility and dissolution rate of RLX remarkably increased in both methods. It was concluded that the prepared inclusion complex showed a remarkable increase in solubility and dissolution of poorly water-soluble drug raloxifene. In the cogrinding mixture, a natural modified gum is used as a surfactant and enhances the solubility and dissolution of RLX without requiring addition of organic solvent or high temperature for its preparation; thus, process is less cumbersome and cost effective. But when both methods were compared; HPβCD complexation method showed significant enhancement of drug solubility.