Abstract: The present invention relates to a new polymorphic form of 5-[4-[2-(5-ethyl-2-pyridyl)ethoxy]benzyl thiazolidine-2,4-dione of Formula I, commonly known as pioglitazone. It also relates to processes for the preparation of new polymorphic form of pioglitazone and pharmaceutical compositions that include the polymorphic form. It also relates to processes for the preparation of pioglitazone hydrochloride having high solubility and improved bioavailability. It also relates to pharmaceutical compositions that include the pioglitazone hydrochloride having high solubility and a method of treatment of Diabetes type II mellitus comprising administration of the pioglitazone hydrochloride having high solubility.