Nystatin is commonly employed to treat fungal infections in the mouth. It is not absorbed via the stomach and it will therefore not treat fungal infections in any part of the body other than the mouth. Nystatin buccoadhesive tablets release the drug very slowly due to the poor solubility of nystatin in water and also the presence of polymers with mucoadhesive properties. Therefore, the aim of the present study was to improve drug release from buccoadhesive tablets, while retaining adequate mucoadhesive properties. To this end, a solid dispersion of nystatin: lactose (1:3) was prepared and mixed with xanthan. The effects of hydrophilic surfactants such as cremophor RH40 and Tween 80 on drug release and mucoadhesive properties of nystatin tablets were also investigated as were swelling and erosion indices and strength of bioadhesion in vitro to a biological membrane. The interaction between nystatin and lactose in solid dispersion formulation was investigated by XRPD, FT-IR and DSC. The results showed that a solid dispersion formulation and mucoadhesive tablets containing surfactants led to faster drug release than their simple physical mixtures. Drug release was also faster from a solid dispersion compared to tablets containing surfactants. Swelling and erosion results showed that tablets made of a solid dispersion swelled and eroded faster than a physical mixture formulation. The presence of surfactant slightly increased the degree of swelling and erosion of buccoadhesive tablets.