This study evaluated and compared theophylline pellets prepared by both suspension and powder layering processes using the bottom spray coater and the tangential rotary granulator, respectively. Hydroxypropyl methylcellulose (HPMC) and hydroxypropyl cellulose (HPC) were employed as binders at various concentrations. The pellets were coated with Eudragit RS and RL to various levels. It was found that pellet sizes, true densities, and drug contents were comparable and independent of processes and binder levels. However, the increase in binder resulted in lower porosity and pore size, as well as smoother pellet surface. The powder layered pellets possessed higher pellet density and smoother surface than did the suspension layered pellets due to the greater consolidation resulted from tumbling and colliding of pellets. Powder x-ray diffraction pattern revealed that theophylline present in the suspension layered pellets was a mixture of anhydrous form II and hydrate, indicating that transformation could occur in aqueous medium. Drug release from uncoated pellets was found to be complete within 20 min. For coated pellets, the release was markedly decreased with the increase in Eudragit level. Both film thickness and anhydrous/hydrate form influenced the release of drug from the pellets. In general, two methods of layering produced the pellets of slightly differences in pellet properties; however, changes of drug characteristics could occur in suspension.