Iloperidone (ILO) is a second-generation antipsychotic drug and a first-line treatment approved by USFDA in May 2009. Iloperidone belongs to Biopharmaceutical Classification Systems (BCS) class II; thus, it is poorly water-soluble, highly permeable, and has pH-dependent solubility. Cyclodextrins and their derivatives have a wide range of applications in different formulations due to their complexation ability, which improves the solubility, stability, safety, and bioavailability of a drug. We have tried the complexation of iloperidone with sulfobutyl ether-β-cyclodextrin (SEβCD) to improve its solubility and dissolution. Complexation was done by the kneading method. The characterization of the SEβCD complexes with Iloperidone was done by FTIR, differential scanning calorimetry (DSC), saturation solubility, etc. A multimedia dissolution of the complex was carried out and compared with the plain drug. A significant improvement in drug release was found from SEβCD complexes in all media when compared with the drug alone.