Solubility enhancement is an exciting field of research with greater emphasis on improving bioavailability of poorly soluble drugs. Liquisolid compact technique is a novel approach for improving solubility, dissolution and bioavailability of poorly soluble drugs. This technique involves usage of highly porous carriers, coating materials for adsorption of completely solubilised drug in suitable non volatile solvent. Newly developed mathematical model in liquisolid compact technique focuses on reduction of erratic flow properties of powder solutions and facilitates improved dissolution of poorly soluble drugs. Improvement in solubility and dissolution of liquisolid compacts is by improved wettability and greater surface area. This technique has a superior potential over other techniques with cost effective and easer scale up towards industrial applications. The focus of this review is on theory and applicability of liquisolid compact technique towards solubility or bioavailability enhancement and pharmaceutical applications of this technique. Different carriers and coating materials employed are elucidated focusing on their impact over prepared liquisolid compacts. Literature reports on applicability of liquisolid compact techniques over wide range of poorly soluble drugs are presented. Moreover, sustained release applications of liquisolid compact technique are also elucidated.