Azithromycin, a semi-synthetically important macrolide is well known for its wide applications as anti-microbials. This drug could act as both bacteriostatic and bactericidal depending on the dosage administered. Apart from its good activity in both Gram positive and Gram-negative micro-organisms, azithromycin was found to be sparingly soluble in water as it is highly lipophilic. Also, the oral bioavailability was found to be as low as 37% due to incomplete absorption. Hence, we worked on the concept of microemulsion technique to increase the solubilization of the drug in a lipophilic environment and also to reduce the particle size to a greater extent that may, on the other hand, enhance the permeation. Our formulation included gentle mixing of cinnamon oil, tween 20 and water to obtain clear and transparent oil-in-water microemulsion system. This system showed enhanced solubility rate, reduced droplet size diameter of 10-45 nm and excellent stability. In addition, the inclusion of cinnamon oil in the system may have added benefit in improving the anti-bacterial activity in certain pathogens.