Granules with release-sustaining properties were developed by twin screw hot melt granulation (HMG) using a combination of stearic acid (SA) and high molecular weight polyethylene oxide (PEO) as matrix for a highly water soluble model drug, metoprolol tartrate (MPT). Earlier studies demonstrated that mixing molten SA and PEO resulted in hydrogen bond formation between hydroxyl groups of fatty acid molecules and ether groups in PEO chains. These molecular interactions might be beneficial in order to elevate the sustained release effect of drugs from a SA/PEO matrix. This study aims to investigate the continuous twin screw melt granulation technique to study the impact of a SA/PEO matrix on the dissolution rate of a highly water soluble drug (MPT). Decreasing the SA/PEO ratio improved the release-sustaining properties of the matrix. The solid state of the granules was characterized using differential scanning calorimetry (DSC), nuclear magnetic resonance (NMR), X-ray diffraction (XRD), Raman spectroscopy, Fourier transform infrared (FTIR) and near infrared chemical imaging (NIR-CI) in order to understand the dissolution behavior. The results revealed a preferential interaction of the MPT molecules with stearic acid impeding the PEO to form hydrogen bonds with the stearic acid chains. However, this allowed the PEO chains to recrystallize inside the stearic acid matrix after granulation, hence, elevating the release-sustaining characteristics of the formulation.