Background: The formulation of nonsteroidal anti-inflammatory drugs with cyclodextrins (CDs) has demonstrated to be a suitable strategy to increase drug aqueous solubility, dissolution rate, and gastric tolerance. Aim: We investigated the effects of the CDs on the physicochemical and pharmacological properties of Etodolac (ET), a practically water-insoluble nonsteroidal anti-inflammatory drug, to individuate a drug formulation with optimized pharmacokinetics and pharmacodynamics. Methods: The interactions in solution of ET with β-CD, hydroxypropyl-β-CD (HP-β-CD), and γ-CD were studied by 13C-NMR spectroscopy and phase solubility method. Solid binary systems, prepared by physical mixing and freeze-drying, were characterized by differential scanning calorimetry, X-ray analysis and Fourier transform infrared spectroscopy, and dissolution studies. An in vivo pharmacological investigation (analgesic activity and gastric tolerance studies) was performed on freeze-dried ET/CD formulations. Results: 13C-NMR and phase solubility studies demonstrated the ability of CDs to complex with ET and increase drug solubility. ET/CD interactions at the solid state occurred at the molecular level only for freezed-dried samples. All binary systems, mainly those containing HP-β-CD and γ -CD, showed a significantly improved dissolution profile of ET. In vivo pharmacological studies evidenced an improvement of analgesic activity and a reduction of gastrolesivity of ET/CD-tested formulations with respect to ET alone. Conclusions: The formulation of ET with CDs demonstrates relevant pharmaceutical potential in view of decreasing dose and side effects of ET. For industrial applications, HP-β-CD appears to be the best partner for ET, as it is less expensive than γ-CD and gives rise to higher drug solubilization than β-CD.