The aim of this work was to evaluate the role of cyclodextrins in topical drug formulations. Solid piroxicam (PX) complexes with beta-cyclodextrin (beta-CD) and randomly methylated beta-cyclodextrin (RAMEB) were prepared by freeze-drying and characterized using differential scanning calorimetry (DSC), X-ray powder diffractometry (XRPD), Fourier transform infrared spectroscopy (FTIR) and near infrared spectroscopy (NIR). A physical mixture of PX and cyclodextrins was characterized by enhanced dissolution properties compared to the dissolution profile of the pure drug due to in situ complex formation. Formation of the PX-cyclodextrin inclusion complex additionally improved the drug dissolution properties. Influence of CDs on drug permeation from the water dispersion and the prepared hydroxypropyl methylcellulose (HPMC) gels was investigated. Permeation of the drug involved three consecutive processes: dissolution of the solid phase, diffusion across the swollen polymer matrix and drug permeation through the membrane. Complexation increased PX diffusion by increasing the amount of diffusible species in the donor phase. Slower drug diffusion through the HPMC matrix was the rate limiting step in the overall diffusion process. Possible interaction between the hydrophilic polymer and cyclodextrin may result in physicochemical changes, especially in a change of rheological parameters.