Surfactants are routinely included in tablets during wet or dry granulations or along with directly compressible vehicles to improve wetting, disintegration and dissolution. Besides this micellar solubilization can improve permeability of poorly soluble drugs via gastrointestinal tract membranes thereby enhancing oral bioavailability. Microparticle-entrapped micelles (MEM) technology is a novel method of incorporating surfactants in tablets for improving in vitro and in vivo performance of poorly water-soluble drugs. Valsartan (VAL) was solubilized in cremophor EL micelles at cloud point temperature; lactose was dissolved in micellar dispersion and the dispersion was directly spray-dried to obtain solid product, which was subsequently converted into tablets using suitable excipients. VAL tablets produced by applying MEM technology improved dissolution performance of valsartan tablets. These tablets exhibited superior dissolution rate over controls and marketed tablets in all media employed irrespective of pH conditions and composition.