This paper describes an experimental study on the drying of wet granules in an agitation fluidized bed. Wet granules composed of lactose and cornstarch were dried in an agitation fluidized hed under various air temperatures, air velocities and agitator rotational speeds. The effects of the conditions on the properties of granules such as mass median diameter, yield, shape and density of the granules are investigated. The relationships between the operating conditions and the drying rates were also examined, It is found that mass median diameter decreases with decreasing air temperature and velocity, and with an increase in agitator rotational speed, while the apparent density, shape factor and yield of fine granules increases, Granules are compressed by the tumbling and compaction effects due to the agitation rotation, which simultaneously diminishes the size of the granules by grinding them, it is also found that the drying rate over a constant drying period increases with air temperature and velocity, but decreases with agitator rotational speed. These results show that too much centrifugal force from agitator rotation forms condensed masses, leading to a decrease in the interfacial drying area. As a result, the mechanism of agitation fluidized bed drying is elucidated and optimal operating conditions are discussed from the view point of granule properties and drying rate.