Melatonin (MT), an effective antioxidant, has therapeutic implications for granular corneal dystrophy type 2 (GCD2) treatment. Eye drop formulations containing cyclodextrins (CDs) were studied with the objective of improving MT solubility, stability, and ocular absorption, while decreasing eye irritation. MT complexes with αCD, βCD, γCD, and 2-hydroxypropyl-βCD (HPβCD) were characterized by phase solubility studies, which demonstrated Higuchi’s AL-type phase solubility profiles. The MT/HPβCD complex showed the highest MT solubility (2.75 mg/mL). Ocular irritation experiments showed HPβCD inclusion alleviated irritation of the eye. After administration of MT formulations to rabbit corneas, each harvested cornea was separated into corneal epithelium, stroma, and endothelium. MT concentrations in the corneal epithelium, stroma, and endothelium for the F1-treated group were 55.5 ± 9.24, 26.7 ± 2.66, and 21.1 ± 1.77 μM while those for the F2-treated group were 127.2 ± 21.01, 43.7 ± 16.93, and 51.0 ± 13.91 μM, respectively. Stability studies for 60 days showed no significant change in pH, osmolarity, and MT content. In conclusion, MT/HPβCD formulations can lower irritation, enhance MT stability, and improve therapeutic efficacy.