Fluid bed granulation techniques are extensively used in pharmaceutical processing for improving the powder properties and wettability of formulations, and ensuring content uniformity of active ingredients. The important stages in the granulation process include spraying of a binder solution onto a fluidized powder bed for inducing particle growth and agglomeration, and finally, drying of the solids with heated air for reducing the moisture content to a desirable endpoint. The residual moisture content in the solids after drying is usually optimized to ensure good chemical stability as well as safe process handling of the material to minimize dust hazards. In a fluid bed system, efficient heat and mass transfer during processing is elemental to the control of particle morphology and moisture content of the final product. Rates of drying are usually faster in the initial stages where the water activity is higher, followed by a slower diffusion limited drying period. Small amounts of water which may be ‘trapped' by diffusion limitations could be critical to chemical stability, if the reactivity of the drug is enhanced by the presence of moisture. The diffusivity of water can be affected by uniformity of components within the granule, and changes in morphology or porosity. Hence, it may be possible to optimize the drying of the formulation by adjusting parameters to control particle morphology during the spray granulation step. We investigate the problem where chemical stability of a drug can be affected by aqueous fluid bed granulation of the formulation. Conversion of an excipient to a higher hydrate form can occur under saturated conditions. Then water can be liberated under accelerated storage and exacerbate chemical degradation. Hence, to prevent entrapment of crystalline water, the fluid bed drying step must be efficient. Experiments can be designed using a small scale fluid bed system to study the effects of granulation conditions on the drying of final product. Parameters controlling the heat and mass transfer during drying such as temperatures, relative humidity, and granulation conditions can be varied to understand the effects on trapped water content Moisture content can be determined with a loss on drying (LOD) method using a moisture balance. This method was ultimately found to be inadequate as an accurate endpoint detection method due to sample variability, slow drying kinetics of the samples, and limited instrument sensitivity (+/- 0.5 wt%). Relative trends between granule batches can be found by LOD. Other methods such as dynamic vapor sorption (DVS) and thermogravimetric analysis (TGA) may be required to more accurately determine the trapped water content. A strong correlation can exist between trapped water and granule stability for batches made at various scales and product temperatures. Pores sizes of granules, measured by Mercury intrusion porosimetry, indicated that drying may be diffusion limited in the Knusden regime where molecular motions of water could be restricted. The monitoring of humidity and temperature of the product bed was found to be important in optimizing the drying of solids. The successful scaleup of granulation processes hence require robust predictions of heat and mass transfer, and their effects on granule morphology. Accurate in-situ analytical techniques for the detection of water content are also instrumental in controlling product stability.