- The purpose of this research was to investigate the performance of cosolvent based solubility-enabling formulations in oral delivery of lipophilic drugs, accounting for the gastrointestinal tract (GIT) luminal solubilization processes, the solubility–permeability interplay, and the overall in vivo systemic absorption. The poorly soluble antiepileptic agent carbamazepine was formulated in three cosolvent-based formulations: 20%, 60%, and 100% PEG-400, and the apparent solubility and rat permeability of the drug in these formulations were evaluated. The performance of the formulations in the dynamic GIT environment was assessed utilizing the biorelevant pH-dilution method. Then, the overall in vivo drug exposure was investigated following oral administration to rats. The three formulations showed dramatic solubility and permeability differences; the 100% PEG-400 provided the highest solubility enhancement and the 20% the poorest, while the exact opposite was evident from the permeability point of view. The dissolution results indicated that the 20% PEG-400 formulation crashes quickly following oral administration, but both the 60% and the 100% PEG-400 formulations allowed full solubilization of the dose throughout the entire GIT-like journey. The best in vivo performing formulation was the 60% PEG-400 (Fsys > 90%), followed by the 100% PEG-400 (Fsys = 76%), and the 20% PEG-400 formulation (Fsys ≈ 60%). In conclusion, this work demonstrates the in vivo solubility–permeability trade-off in oral delivery of lipophilic drugs; when a solubility-enabling formulation is developed, minimal threshold solubility should be targeted, that is just enough to allow solubilization of the drug dose throughout the GIT, while excess solubilizer should be avoided.