Poly(ethylene oxide) (PEO) was used to prepare thin polymer films containing clotrimazole (CT) utilizing hot-melt extrusion (HME) technology. Films containing PEOs of two different molecular weights and the drug were investigated for solidstate characteristics, moisture-sorption, bioadhesivity, mechanical properties, release characteristics, and physical and chemical stability of the drug within the HME films. The solid-state characterization of the drug and the polymer were performed utilizing differential scanning calorimetry and X-ray diffractometry. A Texture analyzer was utilized to study the bioadhesive and mechanical properties of the HME films. Physical and chemical stability of the films, stored at 258C/60% RH, was studied for up to 12 months. XRD profiles indicated that the drug was physically unstable (recrystallization of the drug occurred) after storage for 3 months at 258C/60% RH. Based on the DSC studies, it has been proposed that the recrystallization of the drug may be due to the folding (due to HME) and unfolding (upon storage) of the linear PEO chains. Desirable bioadhesive, mechanical, and thermoplastic properties of PEO qualify it as a promising and potential drug carrier. However, further investigation is necessary to enhance the physical stability of these PEO-drug systems.