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Hydrotropy refers to increasing the water solubility of otherwise poorly soluble compound by the presence of small organic molecules. While it can certainly increase the apparent solubility of a lipophilic drug, the effect of hydrotropy on the drugs' permeation through the intestinal membrane has not been studied. The purpose of this work was to investigate the solubility-permeability interplay when using hydrotropic drug solubilization. The concentration-dependent effects of the commonly used hydrotropes urea and nicotinamide, on the solubility and the permeability of the lipophilic antiepileptic drug carbamazepine were studied. Then, the solubility-permeability interplay was mathematically modeled, and was compared to the experimental data. Both hydrotropes allowed significant concentration-dependent carbamazepine solubility increase (up to ~30-fold). A concomitant permeability decrease was evident both in-vitro and in-vivo (~17-fold for nicotinamide and ~9-fold for urea), revealing a solubility-permeability tradeoff when using hydrotropic drug solubilization. A relatively simplified simulation approach based on proportional opposite correlation between the solubility increase and the permeability decrease at a given hydrotrope concentration allowed excellent prediction of the overall solubility-permeability tradeoff. In conclusion, when using hydrotropic drug solubilization it is prudent to not focus solely on solubility, but to account for the permeability as well; achieving optimal solubility-permeability balance may promote the overall goal of the formulation to maximize oral drug exposure.