Many pharmaceutical compounds of interest form hydrates. The phase behavior of different particle size fractions of trehalose dihydrate was studied as the sugar was dehydrated by heating. Hot-stage microscopy, X-ray powder diffraction, thermogravimetric analysis, and differential scanning calorimetry were used to characterize the phase changes. Small particles (<45 microm) formed an amorphous phase on dehydration and subsequently liquefied at temperatures above the glass transition temperature of amorphous trehalose. Crystallization to the anhydrate was observed from this supercooled liquid. Large particles (>425 microm) underwent a solid-solid conversion from the dihydrate to the anhydrate at temperatures as low as 80 degrees C. This solid-solid conversion was explained by a catalytic effect of the liberated dihydrate water on the rearrangement of the dehydrated phase to the anhydrate. The large surface area-to-volume ratio of the small particles resulted in dehydration prior to attaining the threshold temperature for rearrangement, explaining why solid-solid conversion was absent for these particles.