In this study, we demonstrate the feasibility of using the thermal adhesion granulation (TAG) method to improve granular properties for preparing highly compressible excipients as direct tabletting aids. The TAG method subjects a mixture containing excipients, such as microcrystalline cellulose (MCC), lactose, starch, or dibasic calcium phosphate (DCP), under closed conditions with a low moisture content and low content of polyvinyl pyrrolidone (PVP) as a binder, to heating during mixing by tumble rotation to produce highly compressible granules. Results demonstrated that a closed system is more efficient than an open system at such a low moisture content, and both water and ethanol were able to fulfill the role of a granulation liquid, but water was more appropriate than ethanol for successfully producing granules suitable for use as direct tabletting aids by the TAG method. It was also found that a 5% moisture content in the powder mixture containing MCC and PVP is optimal in the TAG process to produce granules with the desired characteristics for pharmaceutical applications. On the contrary, increasing the moisture content led to further decreases in the mean size and deterioration of the flowability. It was further demonstrated that the TAG process is able to imbue these commonly used diluents with more-desirable physical characteristics of granules for direct tabletting, enabling the processing of these commonly used diluents with 50% PVP into directly compressible matrix materials.