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 ?-cyclodextrin (?CD) and hydroxyl propyl ?-cyclodextrin (HP ?CD).This study represents the formulation of inclusion complex with ?CD and HP ?CD 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 ?CD and HP ?CD, especially with HP ?CD. Complexation of Diacerein with hydrophilic carriers like ?CD and HP ?CD offers a major enhancement in drug solubility.