This study on diclofenac N-(2-hydroxyethyl)pyrrolidine (DHEP) characterizes and compares the anhydrate (DHEPA) and dihydrate (DHEPH) solid state forms using powder X-ray diffraction, infrared spectroscopic, and thermal analyses. Heats of solution and intrinsic dissolution rates are determined. The thermodynamics of hydration are discussed and the entropic cost of dihydrate formation is calculated. Reported differences in the solution behavior of DHEP crystallized from different solvents are explained. The molecular structures of both solid forms were determined and are presented. Crystal data for DHEPA: triclinic, space group P-1 (No 2), a = 11.662(2) A, b = 11.874(2) A, c = 15.296(3) A, alpha = 76.183(14) degrees, beta = 84.575(12) degrees, gamma = 87.028(12) degrees V = 2046.8(6)A3, Z = 4. Crystal data for DHEPH: triclinic, space group P-1 (No 2), a = 9.356(3) A, b = 9.920(2) A, c = 13.5413(12) A, alpha = 69.915(12) degrees, beta = 82.05(2) degrees, gamma = 71.51(2) degrees, V = 1118.9(4) A3, Z = 2. The experimentally observed ease of dehydration under conditions of nitrogen purge is explained in terms of crystal packing within the dihydrate.