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The development of stable solid dispersion formulations that maintain desired improvement of drug dissolution rate during the entire shelf life requires the analysis of drug-polymer solubility and miscibility. Only if the drug concentration is below the solubility limit in the polymer, the physical stability of solid dispersions is guaranteed without risk for drug (re)crystallization. If the drug concentration is above the solubility, but below the miscibility limit, the system is stabilized through intimate drug-polymer mixing, with additional kinetic stabilization if stored sufficiently below the mixture glass transition temperature. Therefore, it is of particular importance to assess the drug-polymer solubility and miscibility, to select suitable formulation (a type of polymer and drug loading), manufacturing process, and storage conditions, with the aim to ensure physical stability during the product shelf life. Drug-polymer solubility and miscibility can be assessed using analytical methods, which can detect whether the system is single-phase or not. Thermodynamic modeling enables a mechanistic understanding of drug-polymer solubility and miscibility and identification of formulation compositions with the expected formation of the stable single-phase system. Advance molecular modeling and simulation techniques enable getting insight into interactions between the drug and polymer at the molecular level, which determine whether the single-phase system formation will occur or not.