This study was conducted primarily to improve the solubility of rebamipide, a poorly water-soluble anti-ulcer drug, using novel ternary solid dispersion (SD) systems and secondly to evaluate the effect of solubility enhancement on its pharmacokinetic (PK) and pharmacodynamic (PD) profile. After dissolving the three components in aqueous medium, ternary SD containing the drug, sodium hydroxide (NaOH) and PVP-VA 64 was achieved by spray drying method, which was used as primary SD. Poloxamer 407, a surfactant polymer, was incorporated in this primary SD by four different methods: co-grinding, physical mixing, melting or spray drying. SD was then characterized by dissolution test, differential scanning calorimetry (DSC), powder X-ray diffraction (PXRD) and Fourier transform infrared spectroscopy (FT-IR). The spray dried SD of poloxamer 407 together with primary SD displayed highest dissolution rate of the drug of about 70% after 2 h. DSC, PXRD and FT-IR characterized the amorphous state and molecular dispersion of the drug in the SD. PK and PD studies in Sprague-Dawley rats revealed that the bioavailability of the drug using optimal SD was about twofold higher than that of reference product, and the irritation area of stomach was significantly reduced in the ulcer-induced rat model using optimal SD as compared to the reference product.