Binary solid dispersions of a poor water soluble drug, itraconazole were prepared by lyophillization technique employing skimmed milk as carrier. Characterization by Differential scanning calorimtry, Scanning electron microscopy suggested partial amorphization of itraconazole in binary solid dispersions. Futhermore, results of Xray diffractometry showed decrease in magnitude of relative degree of crystallinity (RDC) with increase in skimmed milk content. No chemical interaction was observed between itraconazole and skimmed milk, indicated by FT-IR studies. In addition, significant decrease in surface tension values (P<0.01) was observed on increasing the skimmed milk proportion indicating detergent action of milk proteins. The results of solubility studies in Simulated Gastric Fluid (SGF pH 1.2) revealed higher solubility of itraconazole in solid dispersion than bulk drug. Dispersion containing highest skimmed milk proportion (MSD-1) demonstrated 84% drug release in 1 h. The values of % DE 20min and Rdr5min were calculated as 53.2% and 4.16 respectively. The dissolution data showed that the release followed the Higuchi model equation suggesting diffusion as main mechanism of drug release from solid dispersion.