The objective of the present research was to evaluate the physicochemical characteristics of berberine chloride and to assess the complexation of drug with 2-hydroxypropyl-β-cyclodextrin (HPβCD), a first step towards solution dosage form development. The parameters such as log P value were determined experimentally and compared with predicted values. The pH-dependent aqueous solubility and stability were investigated following standard protocols at 25°C and 37°C. Drug solubility enhancement was attempted utilizing both surfactants and cyclodextrins (CDs), and the drug/CD complexation was studied employing various techniques such as differential scanning calorimetry, Fourier transform infrared, nuclear magnetic resonance, and scanning electron microscopy. The experimental log P value suggested that the compound is fairly hydrophilic. Berberine chloride was found to be very stable up to 6 months at all pH and temperature conditions tested. Aqueous solubility of the drug was temperature dependent and exhibited highest solubility of 4.05 ± 0.09 mM in phosphate buffer (pH 7.0) at 25°C, demonstrating the effect of buffer salts on drug solubility. Decreased drug solubility was observed with increasing concentrations of ionic surfactants such as sodium lauryl sulfate and cetyl trimethyl ammonium bromide. Phase solubility studies demonstrated the formation of berberine chloride-HPβCD inclusion complex with 1:1 stoichiometry, and the aqueous solubility of the drug improved almost 4.5-fold in the presence of 20% HPβCD. The complexation efficiency values indicated that the drug has at least threefold greater affinity for hydroxypropyl-β-CD compared to randomly methylated-β-CD. The characterization techniques confirmed inclusion complex formation between berberine chloride and HPβCD and demonstrated the feasibility of developing an oral solution dosage form of the drug.