Pioglitazone, a novel anti-diabetic drug of thiazolidone dione group improves insulin sensitivity in insulin resistant patients. It belongs to BCS class-II, having low solubility and high permeability. Its low solubility in biological fluids, results in poor bioavailability after oral administration. To enhance its solubility, solid dispersions using modified karaya gum in different ratios were prepared by three different methods such as physical mixture, solvent evaporation and kneading method. The enhancement of solubility by natural carrier was compared with semi-synthetic carrier (β-cyclo-dextrins). The solid dispersions were evaluated for physico-chemical properties and dissolution studies in distilled water and 0.1N HCL. Among them, the solid dispersion prepared by solvent evaporation method showed maximum solubility (0.355±0.01mg/ml) when compared with β-cyclo-dextrins and pure drug. Key words: solubility enhancement, solid dispersions, karaya gum, oral disintegrating tablet.