Furosemide (FSD) is a potent diuretic, has a low aq. soly. and an instability in acidic medium which hinder its bioavailability when administered orally.  In the present study, the effect of dimethyl-​β-​cyclodextrin (DM-​β-​CD) on the aq. soly., stability of FSD was studied.  The phase soly. diagram with DM-​β-​CD was classified as Ap-​type, which mean that, the FSD formed 1:1 and 1:2 inclusion complexes with DM-​β-​CD.  The stability consts. (K_1:1 and K_1:2) were calcd. to be 3557 M^-​1 and 65 M^-​1, resp.  The complex formation of FSD and DM-​β-​CD in soln. was also calcd. using spectral shift method.  The value of stability const., K_c, in this case, was found to be 100.0 M^-​1 using Scott's equation and was 157 M^-​1 using Benesi-​Hildebrand plot.  Characterization of the products was carried out by differential scanning calorimetry, IR spectrophotometry, X-​ray anal. and dissoln. study, which confirmed the existence of an inclusion complexation.  FSD soly. was dramatically enhanced by inclusion, esp. in the ground system with DM-​β-​CD.  This might be attributed to the amorphous state, the increased wettability of the drug and the inclusion complex formation.  FSD was found to be rapidly hydrolyzed in the acidic pH region, but in the basic pH region, the drug hydrolysis is extremely low.  The presence of DM-​β-​CD had nonsignificant effect on the hydrolysis of the drug.  Using the Arrhenius parameters obtained from the studies, FSD would have a half-​life of 58 and 60 min. for drug and drug-​DM-​β-​CD complex, resp. under conditions of pH 1.4 and temp. of 37°.