SN-38, an active metabolite of irinotecan, is up to 1,000-fold more potent than irinotecan. But the clinical use of SN-38 is limited by its extreme hydrophobicity and instability at physiological pH. To enhance solubility and stability, SN-38 was complexed with different cyclodextrins (CDs), namely, sodium sulfobutylether β-cyclodextrin (SBEβCD), hydroxypropyl β-cyclodextrin, randomly methylated β-cyclodextrin, and methyl β-cyclodextrin, and their influence on SN-38 solubility, stability, and in vitro cytotoxicity was studied against ovarian cancer cell lines (A2780 and 2008). Phase solubility studies were conducted to understand the pattern of SN-38 solubilization. SN-38-βCD complexes were characterized by differential scanning calorimetry (DSC), X-ray powder diffraction analysis (XRPD), and Fourier transform infrared (FTIR). Stability of SN-38-SBEβCD complex in pH 7.4 phosphate-buffered saline was evaluated and compared against free SN-38. Phase solubility studies revealed that SN-38 solubility increased linearly as a function of CD concentration and the linearity was characteristic of an AP-type system. Aqueous solubility of SN-38 was enhanced by about 30-1,400 times by CD complexation. DSC, XRPD, and FTIR studies confirmed the formation of inclusion complexes, and stability studies revealed that cyclodextrin complexation significantly increased the hydrolytic stability of SN-38 at physiological pH 7.4. Cytotoxicity of SN-38-SBEβCD complex was significantly higher than SN-38 and irinotecan in both A2780 and 2008 cell lines. Results suggest that SBEβCD encapsulated SN-38 deep into the cavity forming stable inclusion complex and as a result increased the solubility, stability, and cytotoxicity of SN-38. It may be concluded that preparation of inclusion complexes with SBEβCD is a suitable approach to overcome the solubility and stability problems of SN-38 for future clinical applications.