A novel cogrinding method for improving dissolution characteristics of poorly water-soluble drugs was developed. A coground mixture of nifedipine (NP)-polyethylene glycol 6000-hydroxypropylmethyl cellulose system prepared in the presence of small amount of water showed remarkable effect with respect to NP dissolution and its apparent solubility. Although the performance of the coground mixture was superior to that of spray-dried powder with the same composition, the X-ray diffraction pattern indicated the mixture did not change to amorphous state. In addition, the transmission electron microscopy revealed that NP seemed to exist in coacervate-like fine particles (50–200 nm) in water. This cogrinding method was also effective for other poorly water-soluble drugs such as griseofluvin and indomethacin. Some drug–polymer interactions through hydroxypropoxyl groups seemed to participate in the mechanism of the improvement of dissolution characteristics, because the content of the functional group affected the extent of solubility-enhancing effect. Furthermore, the addition of small amount of water in cogrinding was especially effective, because it promoted the interactions. The coground mixture showed the same plasma concentration as NP solution of PEG 400 when it was orally administered to beagle dogs. From these results, it is clear that the present cogrinding method is very effective for improvement of bioavailability of poorly water-soluble drugs.