The effects of taste masking are determined by interactions between drug and excipients as well as the microstructures of the particulate drug delivery systems (DDS). Cyclodextrin (CD) is a widely used taste masking agent, to which the relationship between kinetic parameters (Ka and Kd) of a drug and taste masking remains unexplored, which is investigated for the first time in this study. A data base of the kinetic parameters for drug-CD was established by Surface Plasmon Resonance Imaging (SPRi) and High Performance Affinity Chromatography (HPAC). Combined with the electronic tongue, Ka and Kd based models for the taste masking effect of HP-β-CD were successfully established and applied to the prediction of taste masking effects. Paracetamol was used as a model drug for taste masking formulation optimization. As well as drug release the microstructure of solid DDS has considerable influence on drug taste. The microstructure of lipid microspheres and the molecular distribution of drug and excipients in lipid microspheres were investigated by Synchrotron radiation-based micro-computed tomography (SR-μCT) and Synchrotron radiation-based Fourier-transform infrared spectromicroscopy (SR-FTIR), respectively. The results demonstrated that the polymeric formulation components as well as shape and particle size of the drug were the key factors to taste masking of paracetamol by inhibiting bust release thereby reducing the interaction intensity of the bitterness. The FTIR absorption spectra confirmed the deposition and formation of chitosan and gelatin films on the drug microsphere surface by layer-by-layer coating. In conclusion, this research demonstrates the molecular kinetic basis of CD taste-masking as well as microstructural basis of particle systems for bitter taste masking.