The solubility behavior of drugs remains one of the most exigent aspects in formulation development.With the advent of combinatorial chemistry and high throughput screening, the number of poorly water soluble compounds has dramatically increased. Among all the newly discovered chemical entities, about 40-45% drugs fail to reach market due to their poor water solubility. Because of solubility problem, bioavailability of drugs gets affected and hence solubility enhancement becomes necessary. Solid dispersions have attracted considerable interest as an efficient means of improving the dissolution rate and hence the bioavailability of drugs. The various preparation techniques, carriers used, advantages and limitations of solid dispersions and compiles some of the recent advances. There are various methods available to improve the solubility of the new drug in which solid dispersion emerged promising. A Solid dispersion generally composed of two components- the drug and the polymer matrix. Numerous methods are existing to prepare the solid dispersions such as melting method, solvent evaporation method, fusion method, kneading method, melting method, spray drying method, co-grinding method, lyophilization technique, hot melt extrusion, melt agglomeration, supercritical fluid (SCF) technology etc. Solid dispersion technologies are particularly promising for improving the oral absorption and bioavailability of BCS Class II drugs. The experience with solid dispersions over the last 10-15 years indicates that this is a very fruitful approach in improving the release rate and oral bioavailability of poorly water soluble drugs. Hence, this approach is expected to form a basis for the commercialization of many poorly water-soluble and water-insoluble drugs in their solid-dispersion formulations in the near future.