The physicochemical properties of melatonin (MT) in propylene glycol (PG) and 2-hydroxypropyl-.betha.-cyclodextrin $(2-HP{eta}CD)$ vehicles were characterized. MT was endothermally decomposed as determined by differential scanning calorimetry (DSC). Melting point and heat of fusion obtained were $116.9{pm}0.24^{circ}C $.and $7249{pm}217 cal/mol$., respectively. MT as received from a manufacture was very pure, at least 99.9%. The solubility of MT in PG solution increased slowly until reaching 40% PG and then steeply increased. Solubility of MT increased linearly as concentration of $2-HP{eta}CD$ without PG INCREASED$(R^2=0.993)$. MT solubility in the mixtures of pg and $2-HP{eta}CD$ also increased linearly but was less than the sum of its solubility in $2-HP{eta}CD$ and PG individually. The MT solubility was low in water, simulated gastric or intestinal fluid but the highest in the mixture of PG(40v/v%) and $2-HP{eta}CD$ (30w/v%) although efficiency of MT solubilization in $2-HP{eta}CD$ decreased as the concentration of PG increased. MT was degraded in a fashion of the first order kinetics $(r^2>0.90)$. MT was unstable in strong acidic solution (HCl-NaCl buffer, pH 1.4) but relatively stable in other pH values of 4-10 at $70^{circ}C$. In HCl-NaCl buffer, MT in 10% PG was more quickly degraded and then slowed dpwm at a higher concentration. However, the degradation rate constant of MT in 2-HP.betha.CD was not changed significantly when compared to the water. The current studies can be applied to the dosage formulations for the purpose of enhancing percutaneous absorption or bioavailability of MT.