The objective of the present study was to evaluate the potential of ternary system (comprised of famotidine, beta-cyclodextrin (beta-CyD) or its derivatives and a hydrophilic polymer) as an approach for enhancing the aqueous solubility and masking the bitter taste of famotidine. The aqueous solubility of famotidine increased in the presence of beta-CyDs, particularly sulfobutyl ether beta-CyD (SBE-beta-CyD), and it was further enhanced by the combination of SBE-beta-CyD and polyvinyl pyrrolidone (Povidone) K30. The solid binary (drug-beta-CyDs) and ternary (drug-beta-CyDs-Povidone K30) systems were prepared by the kneading and freeze-drying methods. The dissolution rates of these solid systems were much faster than that of the drug alone. A taste perception study was carried out, initially using a taste sensory machine and subsequently on human volunteers to evaluate the taste masking ability of the ternary complexation. Our results indicated that the combination of SBE-beta-CyD and Povidone K30 is effective not only in the enhancement of the solubility and dissolution rate of famotidine, but also in masking of the bitter taste of the drug. This technique may be of value for the pharmaceutical industries, especially in preparation of rapidly disintegrating tablets dealing with bitter drugs to improve patient compliance and thus effective pharmacotherapy.