The binary system of APAP and urea was found to be a simple eutectic mixture with negligible formation of solid solutions. Solubility studies indicated that urea increased significantly the solubility of APAP. Dissolution rate studies were conducted with APAP alone, and in fused and physical mixtures with urea. An unusual dissolution phenomenon was found to exist in the system and is considered. In all cases the presence of urea enhanced the dissolution rate of APAP by virtue of a microenvironmental solubilization. The fused mixture at the eutectic composition was found to give similar, but prolonged enhancement of dissolution rate as compared to the physically mixed sample.