Oral lipid-based formulations provide a significant opportunity to address the poor and variable gastrointestinal absorption associated with poorly water soluble drugs. It is useful to discuss how a formulation can strategize various options creatively to overcome some of the challenges posed by the softgel dosage form development of a highly hydrophobic drug with large dose. Etodolac (ETO) was formulated in different lipid vehicle according to Lipid Formulation Classification System (LFCS) to optimize the appropriate fill composition and was subjected to different tests for characterization. Water migration studies, rupture test and mechanical properties of softgels were also performed to investigate the effect of the formulation materials on the integrity, physical stability of the prepared capsules and on the dissolution characteristics of drug. Selected formulations were assessed for in vitro dissolution profile and rupture test for softgel before and after accelerated and shelf stability for 3 months. Results revealed a correlation between the composition of the softgel core fill liquid and drug dissolution parameters. Application of hydrophilic surfactants showed a remarkable enhancement in the dissolution rate of drug. The extent of migration of a solute between a fill and a shell depends on the hydrophilicity of the solute, composition of the shell formulation. Antioxidants should be added to formulations containing hydrophilic surfactants which composed of polyoxyethylene moiety. Nominated formula containing polyethylene glycol/poloxamar 407 showed a good and stable dissolution results after accelerated and shelf stability in addition to better mechanical results.