The lipid excipients of the self-emulsifying drug delivery systems (SEDDS) could play a role in interfering with the drug precipitation to maintain its supersaturation, a step with possible major significance on the SEDDS. Thus, the effect of lipid chain length on indomethacin precipitation rate from SEDDS upon dilution was studied. Indomethacin SEDDS were prepared using medium and long chain lipids at 5% and 13% (w/w) drug load. Two medium chain lipids Lauroglycol and Capryol, and two long chain lipids Labrafil and castor oil, were studied. The 13% w/w SEDDS were evaluated for drug release, and the physicochemical properties of the precipitated drug were characterized by PXRD, DSC, IR and Raman. The final optimized SEDDS consisted of Lauroglycol (lipid): Transcutol (co-solvent): Labrasol (surfactant). No precipitate was observed with long chain lipids SEDDS, whereas medium chain lipids SEDDS showed precipitation within 30 min of drug release from 13% w/w formulations. Precipitation studies showed that the medium chain lipids resulted in a modified indomethacin form possibly an ester. The ester formation signifies the interaction between indomethacin and medium chain length lipids. The study emphasizes the importance of lipids chain length of excipients in successful SEDDS formulations. The study provides insight into the underlying drug lipid interactions in SEDDS formulations.