The aim of this study is to understand the basic mechanism of the food effect on oral drug absorption from cyclodextrin (CyD) containing formulations. Danazol (DNZ) and Albendazole (ABZ) were used as model drugs with poor water solubility. Both drugs were suspended or dissolved in Fasted State or Fed State Simulated Intestinal Fluid (FaSSIF or FeSSIF) containing various concentrations of 2-Hydroxypropyl-beta-cyclodextrin (HP-βCyD). Drugs were applied to a μFlux system as a suspension or solution and the dissolved concentration and the permeated amount were monitored. Dissolved drug concentration was analyzed based on the chemical equilibrium to calculate the concentrations of free drug, drug-CyD complex and drug-bile acid micelle complex. Mathematical analysis revealed that the bile acid also interacted with HP-βCyD to displace the drug and reduced the solubilizing capacity of HP-βCyD. The permeation rate of DNZ was faster in FaSSIF than in FeSSIF at 1% HP-βCyD while it became faster in FeSSIF at 2% HP-βCyD, suggesting that complexes with HP-βCyD and with the bile acid micelle can diffuse through the unstirred water layer to contribute to the permeation by providing a free DNZ at the vicinity of the membrane. In contrast, the permeation of ABZ follows the free drug concentration since its permeation is rate-limited by the membrane permeation itself. In vivo rat study with 1% HP-βCyD showed the higher absorption of DNZ in FaSSIF than in FeSSIF, corresponding well to the in vitro results. With 2% HP-βCyD, almost the same absorption profiles were observed in FaSSIF and FeSSIF despite the faster membrane permeation in FeSSIF, possibly due to the slower dissolution of DNZ in FeSSIF. In conclusion, in vitro study with a mini-scale system such as a μFlux system is useful to understand the complicated interactions of the drug with CyDs and/or bile acids and is helpful for designing efficient and robust formulations of poorly soluble drugs using CyDs as an excipient.