The potential of liquisolid systems to improve the dissolution properties of water-insoluble agents was investigated using hydrocortisone as the model medication. The in vitro release patterns of this very slightly water-soluble corticosteroid, formulated in directly compressed tablets and liquisolid compacts, were studied at different dissolution conditions. The new formulation technique of liquisolid compacts was used to convert liquid medications such as solutions or suspensions of hydrocortisone in propylene glycol, a nonvolatile liquid vehicle, into acceptably flowing and compressible powders by blending with selective powder excipients. Several liquisolid tablet formulations were prepared using a new mathematical model to calculate the appropriate quantities of powder and liquid ingredients required to produce acceptably flowing and compressible admixtures. Due to their increased wetting properties and surface of drug available for dissolution, liquisolid compacts demonstrated significantly higher drug release rates than those of conventionally made, directly compressed tablets containing micronized hydrocortisone. The in vitro drug dissolution rates of liquisolid tablets were found to be consistent and independent of the volume of dissolution medium used, in contrast to the plain tablets which exhibited declining drug release patterns with decreasing dissolution volumes. It has been also shown that the fraction of molecularly dispersed drug in the liquid medication of liquisolid systems is directly proportional to their hydrocortisone dissolution rates.