The incorporation of phloretin (PHL), a dihydrochalcone flavonoid, in functional foods is usually hampered by its low aqueous solubility. In this regard, we investigated the impact of complexation of PHL with sulfobutylether-β-cyclodextrin (SBE-β-CD, Captisol®) to overcome its limitation. The phase solubility studies of PHL with different β-CDs derivatives represents AL-type of curve where, SBE-β-CD demonstrated highest apparent stability constant (Ks: 15,856 M−1) indicating its strong affinity to form host-guest assembly. Solid-state characterizations (including SEM, FT-IR, PXRD, DSC, TGA) provided direct evidences of inclusion complex (IC) formation. The detailed molecular interaction between the host–guest assembly was performed using 1H NMR and 2D-NOESY revealed that protons of aromatic phenyl ring of PHL (guest) molecule exhibit direct correlation with the protons lying in the inner cavity of SBE-β-CD (host). Furthermore, the anticancer potential of PHL/SBE-β-CD-IC was examined using cytotoxicity studies, caspase 3/7 activation assay, reactive oxygen species (ROS) generation and disturbance in mitochondrial membrane potential (MMP) in lung carcinoma cell line (A549) and human pancreatic cancer cell line (MiaPaCa–2). The in-vitro cytotoxicity assay on both cell lines demonstrated higher antiproliferative activity of IC as compared to free PHL in concentration dependent manner. In addition, it was found that PHL/SBE-β-CD-IC induces apoptosis via activation of caspase 3/7, reactive oxygen species generation and inducing depolarization of mitochondrial membrane potential in both the cell lines (MiaPaCa–2 and A549). Overall, the study provides a promising approach to enhance the solubility and bioactivity of PHL utilizing SBE-β-CD inclusion complexation.