Meloxicam, a non-steroidal anti-inflammatory drug is used in the treatment of rheumatoid arthritis and osteoarthritis. It is practically insoluble in water leading to poor dissolution, variations in bioavailability and gastric irritation on oral administration. In order to modulate its gastric side effect and to increase aqueous solubility, physical mixture and solid dispersion of the drug were prepared with skimmed milk. The analgesic, anti-inflammatory and ulcerogenic effects were assessed for physical mixture and solid dispersion in comparison to pure meloxicam. The results indicate that solid dispersion possess better analgesic and anti-inflammatory properties with less ulcerogenic potential as compared to pure meloxicam.