Carbamazepine, an anticonvulsant drug is one of the suitable activecompounds for the study of crystal and polymorphism study. Hydrate formation or dehydration of a given hydrate may affect the overall performance of the ultimate formulations and it has been estimated that more than 30 % available active drug compound can form a hydrate. The anhydrous form of the compound always shows higher aqueous solubility and dissolution parameter as compared to hydrates. This ultimately led to improved bioavailability when the rate limiting step for the absorption is dissolution rate. The purpose of the present investigation was to compare various techniques for the formation of Carbamazepine dihydrate from anhydrates and also to discriminate crystal forms of Carbamazepine by Melting point, FTIR, DSC, Powder X-ray diffractometry analysis, NMR, scanning electron microscopy, solubility and intrinsic dissolution testing. Carbamazepine phase transformation of solid state occurs when exposed to the environmental condition, which can affect the performance of the drug and the formulations.