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Iloperidone is a second-generation antipsychotic drug which is used for the treatment of schizophrenia and has very low aqueous solubility and bioavailability. This drug also undergoes first-pass metabolism. The aim of this work is to formulate fast-dissolving sublingual films of iloperidone to improve its bioavailability. Sublingual films were prepared by solvent casting method. Hydroxypropyl methyl cellulose E5, propylene glycol 400, and transcutol HP were optimized using Box–Behnken three-level statistical design on the basis of disintegration time and folding endurance of films. Iloperidone:hydroxypropyl-β–cyclodextrin kneaded complex was used in films instead of plain drug due to its low solubility. Optimized film was further evaluated for drug content, pH, dissolution studies, ex vivo permeation studies, and pharmacokinetic studies in rats. The optimized film disintegrated within 30 s. The in vitro dissolution of the film showed 80.3 ± 3.4% drug dissolved within first 5 min. In ex vivo permeation studies using sublingual tissue, flux achieved within first 15 min by film was around 117.1 ± 0.35 (mcg/cm2/h) which was ten times more than that of plain drug. This formulation showed excellent uniformity. AUC and Cmax of film were significantly higher (p