Aceclofenac, nonsteroidal anti-inflammatory drug, the bioavailability of aceclofenac is very low which is mainly due to its low solubility in water. Phase solubility diagram of aceclofenac in aqueous $\beta$-cyclodextrin solution were constructed with concentration 0-15 mMole. The phase solubility diagram of aceclofenac with $\beta$-cyclodextrin could be classified as A L-type, indicating 1:1 stochiometry. Binary inclusion complex of aceclofenac with $\beta$-cyclodextrin was prepared by kneading and spray drying technique, physical mixture was prepared for comparison. Effect of water soluble polymer (poly ethylene glycol 6000) was studied on kneaded binary kneaded inclusion complex in two proportions 5 % and 10 %. Binary and ternary systems of aceclofenac with $\beta$-cyclodextrin prepared by various methods were characterized by differential scanning calorimetry and Powder X-ray diffractometry. It could be concluded that aceclofenac could form inclusion complex with $\beta$-cyclodextrin. The dissolution rate of aceclofenac was increased by inclusion complexation with $\beta$-cyclodextrin. The ternary kneaded complex with 10% poly ethylene glycol shows improvement in dissolution rate as compared to kneaded inclusion complex. The ternary kneaded complex (10% poly ethylene glycol) and spray dried inclusion complex exhibits fast dissolution as compared to plain aceclofenac. In phramcodynamic study, spray dried complex and ternary kneaded complex (10% poly ethylene glycol) significantly decreases acetic acid induced writhing as compared to control group and thus exhibited significant analgesic activity, whereas aceclofenac was found to be insignificant. {\textcopyright} RJPT All right reserved.