Cyclodextrins are used in pharmaceutical substances principally for their ability to make these substances water-soluble and therefore bioavailable. Improved solubility is achieved by complexing the active ingredients, which accelerates the body's absorption of the pharmaceutical substance. If the cyclodextrin complex containing the active ingredient takes the form of a powdery solid, the active ingredient can be easily dosed and is suitable for medicines in tablet form. Complexation with cyclodextrins has other benefits that vary with the guest component. For example, allicin found in garlic can be converted to an odorless and flavorless cyclodextrin complex in tablet form.

The controlled release of the active ingredient plays a key role in medicines which require the active ingredients to be steadily released over a long period. Nicotine plasters and nicotine gum are well-known examples, where nicotine encapsulated in cyclodextrins is steadily released over a long period of time. In Germany, where only β-cyclodextrin has been approved, the possible uses for cyclodextrins are restricted compared with other countries.

A formulation containing the antihistamine cetirizine is a further example of the use of cyclodextrins in medicines available in Germany. Here, complexation is used to mask the extremely bitter taste of cetirizine.
Internationally, cyclodextrin derivatives such as hydroxypropyl β-cyclodextrin and methyl β-cyclodextrin, tend to be used for complexation in the pharmaceutical industry and for research, because they are more water-soluble and improve the bioavailability of the encapsulated pharmaceutical substance.

However, cyclodextrins are also used in pharmaceutical products, because they bring benefits such as increased stability of the guest components to light, oxygen and heat.