The aim and objective of this study was to develop and characterize self micro emulsifying drug delivery system (SMEDDS) in liquid and pellet forms that result in improved solubility, dissolution and in vitro absorption of the poorly water soluble compound clarithromycin. Solubility of clarithromycin was determined in various vehicles including oil, surfactant and co-surfactant. Pseudo ternary phase diagram were used to evaluate the micro emulsification existence area and the release rate of clarithromycin was investigated using an in vitro dissolution test. SMEDDS formulations were tested for micro emulsifying properties and the resultant micro emulsion were evaluated for clarity, stability, particle size, drug content etc. Formulation development and screening was done based on results obtained from phase diagrams and characteristics of resultant micro emulsion. The solid SMEDDS pellets are characterized by globule size analysis and drug release studies of formulations are compared with plain drug. All batches of liquid SMEDDS was selected for incorporation into MCC in different ratios to assess the possibility of pellet production. Pellets were characterized for their size, shape, friability and in vitro dissolution. The optimized formulation of both liquid and solid SMEDDS showed maximum (80%) release in 60 minutes as compare to convesional tablet of clarithromycin. Thus, the study confirmed that the SMEDDS formulation can be used as a possible alternative to traditional oral formulation of clarithromycin to improve its solubility and bioavailability.