Most of the newly invented active pharmaceutical ingredients (APIs) are poor water soluble and dissolution rate is the limiting step in bioavailability from compressed solid dosage forms. Objective of the study was to elucidate the effect of hydrophilic carriers on dissolution rate of poor water soluble drug and utilization of co-grinded Clarithromycin in preparation of tablets by direct compression. Intrinsic dissolution rate of Clarithromycin was determined according to United States Pharmacopeia (USP) using rotating disk method. Hydrophilic carrier (micro crystalline cellulose) was applied in varying ratios (1:1, 1:2 and 1:4; drug to carrier ratio by weight) for enhancement of dissolution rate of Clarithromycin by co-grinding technique. Co-grinded Clarithromycin was prepared by compressing lubricated physical mixture (blend of Clarithromycin and micro crystalline cellulose) to slugs, followed by granulation. Tablets containing co-grinded Clarithromycin were prepared by direct compression technique and evaluated for various official and unofficial parameters at pre compression and post compression level. The prepared tablets were compared with marketed tablets in terms of physical parameters, mechanical strength, disintegration behavior and in-vitro drug release. Dissolution profiles of both types of the tablets were compared on the basis of maximum drug release, dissimilarity factor (f 1), similarity factor (f 2) and dissolution efficiency. Clarithromycin is a class-II drug, with poor water solubility. Its intrinsic dissolution rate is very low (0.678mg/cm 2 .min). In comparison to intrinsic dissolution rate, significant increase in dissolution rate of Clarithromycin was observed by co-grinding with hydrophilic carriers (267.11%). Dissolution rate of Clarithromycin enhanced with concentration of hydrophilic carrier and maximum increase was observed at 1:2 (drug to carrier ratio by weight). By further increasing ratio of the carrier resulted in decrease in dissolution rate due to cushioning effect. Tablets containing cogrinded Clarithromycin, showed better dissolution profile compared with marketed tablets. In comparison with marketed tablets, maximum drug release in 60min, Q60 (99.73±0.39), Q30 (75.81±0.19%), Q15 (31.17±0.26%), and dissolution efficiency (93.73%) were higher for tablets containing co-grinded Clarithromycin. Dissolution rate of poor water soluble drug (Clarithromycin) can be enhanced by co-grinding with hydrophilic carrier (micro crystalline cellulose). Co-grinding is an environment friendly technique that can be applied for enhancement of dissolution rate of poor water soluble APIs irrespective of nature and dose.