Simultaneous small-angle X-ray scattering/wide-angle X-ray scattering (SAXS/WAXS) was employed to elucidate the physical state and location of various small molecule drugs blended with polyethylene glycol (PEG), as well as the time dependent microstructural evolution of the systems. Samples were prepared by comelting physical mixtures of the drug and PEG, followed by solidification at 25 °C. The model drugs selected encompassed a wide variety of physicochemical properties in terms of crystallization tendency and potential for interaction with PEG. It was observed that compounds which crystallized rapidly and had weak interactions with PEG tended to be excluded from the interlamellar region of the PEG matrix. In contrast, drugs which had favorable interactions with PEG were incorporated into the interlamellar regions of the polymer up until the point at which the drug crystallized whereby phase separation occurred. These factors are likely to impact the effectiveness of drug/PEG systems as drug delivery systems.