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The purpose of this study was to elucidate the formation of crystal hydrates of niclosamide and to delineate the effect of relative humidity on the crystal forms obtained from acetone and ethyl acetate. Recrystallization of niclosamide was performed in the presence and absence of moisture. Two hydrates and their corresponding anhydrates were isolated. The hydrates obtained by the process of recrystallization from acetone (Form I) and that obtained from ethyl acetate (Form II) were classified based on differences in their dehydration profile, crystal structure, shape, and morphology. Crystals obtained in the absence of moisture were unstable, and when exposed to the laboratory atmosphere transformed to their corresponding hydrates. Differential scanning calorimetry thermograms indicate that Form I changes to an anhydrate at temperatures below 100°C, while Form II dehydrates in a stepwise manner above, 140°C. This finding was further confirmed by thermogravimetric analysis. Dehydration of Form II was accompanied by a loss of structural integrity, demonstrating that water molecules play an important role in maintaining its crystal structure. Form I, Form II, and the anhydrate of Form II showed no significant moisture sorption over the entire range of relative humidity. Although the anhydrate of Form I did not show any moisture uptake at low humidity, it converted to the monohydrate at elevated relative humidity (>95%). All forms could be interconverted depending on the solvent and humidity conditions.