The roles of magnesium oxide (MgO) release from solid dispersions (SDs) in simulated gastric fluid (SGF), simulated intestinal fluid (SIF) and water were investigated to elucidate the enhanced dissolution and reduced intestinal damages of telmisartan as a model drug. The polyethylene glycol 6000 (PEG 6000) was used to prepare the SDs. Three SDs were prepared: SD1 (PEG, MgO, TEL), SD2 (PEG 6000, TEL), SD3 (MgO, TEL). The physical mixture (PM) consisting of SD2 and MgO was also prepared. A binary SD without MgO (SD2) was also prepared for comparison in microenvironmental pH (pH(M)) modulation. The faster MgO released, the less control of pH(M) and the less enhanced dissolution of TEL were in consequences. SD3 increased dissolution in SIF and water (about 67%). Interestingly, ternary SD1 showed almost complete dissolution in all three media but dissolution of PM was the lowest due to the fast release of MgO and poor modulation of pH(M). MgO did not change the drug crystallinity but did have a strong molecular interaction with the drug. Additionally, the SD3-bearing tablet quickly increased pH(M) but then gradually decreased due to faster release of MgO while the SD1-bearing tablet gradually increased pH(M) at all fractional dimensions of the tablet by the MgO slowly released. The pH(M) of PM-bearing tablets was not varied as a function of time. Thus, the MgO-bearing SD1 also minimized gastrointestinal tissue damage caused by the model drug.