Niacin granules made by using 50% microcrystalline cellulose (MCC), as Avicel(R) or Emcocel(R), resulted in similar physical-chemical properties with respect to the morphology, particle size distribution (10-30 mesh), release of drug (95% dissolved in 30 min) and crushing strength of the spherical granules (6.2-6.9 N). After coating with Surelease(R), the granules containing 50% MCC exhibited faster release of niacin than those containing 25% MCC. The release of niacin from the compressed compacts of the coated granules was much faster than those of the uncompressed. These results were explained based on the phenomenon of fracture and disintegration of these coated granules. Results of this study revealed that the composition of core formulation of these granules plays an important role in altering the release properties of water soluble drug. Furthermore it was found that the use of wax particles during compression led to further retard the release of drug from the compacts of the coated granules.