Effect of cyclodextrins on aqueous solubility of 1-[5-(3-chloro-phenylamino)-1,2,4-thiadiazol-3-yl]-propan-2-ol (I), which was synthesized and proposed for the treatment of Alzheimer’s disease, was studied. First of all, inclusion complex formation of I with different cyclodextrins was studied in aqueous solutions. Formation of more stable complexes with β- and hydroxypropyl-β-cyclodextrins was revealed. Next, solid inclusion complexes of I with β- and hydroxypropyl-β-cyclodextrins were prepared by the mechanical grinding, and their existence in the solid state was confirmed by powder X-ray diffraction, FTIR spectroscopy, microscopy, and thermochemical methods. Dissolution testing of the tablets of pure I and its complexes with β- and hydroxypropyl-β-cyclodextrins in the aqueous buffered solutions simulated the biological environment was carried out. The observed drastic enhancement of dissolution extent and dissolution rate of the complexes was attributed to the inclusion complex formation.