The current study was aimed to prepare a molecular complex of erlotinib (ERL) with phospholipid (PC) for enhancement of solubility and thus bioavailability, therapeutic efficacy and reducing the toxicity of erlotinib. Phospholipid complex of drug was prepared by solvent evaporation method and characterized by differential scanning calorimetry (DSC), Fourier transform infra-red spectroscopy (FT-IR), proton and phosphorus nuclear magnetic resonance spectroscopy (1H NMR and 31P NMR), powder X-ray diffraction (P-XRD), scanning electron microscopy (SEM) and transmission electron microscopy (TEM), which all explained the interactions of two components, validating the complexation phenomenon. In silico study also supported the phase change and molecular interactions for the establishment of ERL-PC. Spherical shaped nanostructures with 183.37 ± 28.61 nm size, −19.52 ± 6.94 mV potential and 28.59 ± 2.66% loading efficiency were formed following dispersion of ERL-PC in aqueous media. In vitro release study revealed the higher release of ERL-PC due to amorphization and solubilization of drug. Caco-2 cell uptake resulted in ˜2 fold higher uptake of ERL-PC than free drug. In vitro cell culture studies were performed using human pancreatic adenocarcinoma cell lines, which demonstrated the higher cytotoxicity and apoptosis in case of ERL-PC. In vivo pharmacokinetics also supported the in vitro observations and showed ˜1.7 fold higher bioavailability with ERL-PC than ERL. Finally, in vivo efficacy and toxicity studies explained the superiority of ERL-PC over the free drug. Based on the results, phospholipid complex appears to be a promising tool to enhance bioavailability, efficacy, cytotoxicity and safety of erlotinib.