Cefpodoxime proxetil (CPDX-PR) is an oral cephalosporin antibiotic with poor aqueous solubility and bioavailability. Effect of β-cyclodextrin on aqueous solubility and dissolution rate of cefpodoxime proxetil was evaluated by the formation of solid inclusion complexes in 1:2 molar ratio of drug: cyclodextrin. Phase solubility study was carried out whereby a typical Bs type curve was obtained thus, indicating a 1:2 stoichiometric ratio for optimum complex formation. Solid inclusion complexes in 1:2 molar ratios were prepared by using methods such as physical mixture, solvent evaporation and freeze drying. Prepared complexes were characterized by fourier transform infrared spectroscopy (FT-IR) differential scanning calorimetry (DSC), powder x-ray diffraction (PXRD) and scanning electron microscopy (SEM). Results of in vitro studies appraised of an increased solubility and dissolution rate of cefpodoxime proxetil on complexation with β- cyclodextrin (P < 0.05) as compared to CPDX-PR alone. Amongst the complexes prepared by different methods, the complex prepared by freeze drying showed the highest dissolution rate (P < 0.01). The in vitro antimicrobial activity of cefpodoxime proxetil and its freeze dried complex (1:2) was studied against both antibiotic-susceptible and antibiotic-resistant clinical isolates of Neisseria gonorrhoeae. The freeze dried complex (1:2) inhibited all penicillin-susceptible strains and penicillinase-producing strains at 0.015 μg/ml concentration. Chromosomally resistant strains which were not responsive to penicillin were inhibited by the complex at 0.125 μg/ml concentration. The study revealed that complexation of cefpodoxime proxetil with β-cyclodextrin effectively enhanced the aqueous solubility and in vitro antibacterial activity.