The objectives of this study were to investigate the particle size distribution, morphology and dissolution properties of spherical pellets produced by hot-melt extrusion and spheronization and to compare the properties of hot-melt extruded pellets with beads manufactured by a traditional wet-mass extrusion and spheronization method. Spherical pellets were produced by hot-melt extrusion without the use of water or other solvents. A powder blend of theophylline, Eudragit(R) Preparation 4135 F, microcrystalline cellulose and polyethylene glycol 8000 was hot melt-extruded and the resulting composite rod was cut into cylindrical pellets. The pellets were then spheronized in a traditional spheronizer at an elevated temperature. The same powder blend was processed using conventional wet-mass techniques. Unlike wet-mass extruded pellets, pellets prepared from hot-melt extrusion displayed both a narrow particle size distribution and controlled drug release in dissolution media less than pH 7.4. Scanning electron microscopy, X-ray diffraction and porosity measurements were employed to explain the differences in drug release rates of theophylline from pellets produced by the two processing techniques. Theophylline release from the hot-melt extruded pellets was described using the Higuchi diffusion model, and drug release rates from wet-granulated and melt-extruded pellets did not change after post-processing thermal treatment.