Formulations containing different lactose grades, paracetamol, and cimetidine were granulated by extrusion granulation and high shear granulation. Granules were evaluated for yield, friability, and compressibility. Tablets were prepared from those granules and evaluated for tensile strength, friability, disintegration time, and dissolution. The different lactose grades had an important effect on the extrusion granulation process. Particle size and morphology affected powder feeding and power consumption, but had only a minor influence on the granule and tablet properties obtained by extrusion granulation. In contrast, the lactose grades had a major influence on the granule properties obtained by high shear granulation. Addition of polyvinylpyrrolidone (PVP) was required to process pure paracetamol and cimetidine by high shear granulation, whereas it was feasible to granulate these drugs without PVP by extrusion granulation. Granules prepared by extrusion granulation exhibited a higher yield and a lower friability than those produced by high shear granulation. Paracetamol and cimetidine tablets compressed from granules prepared by extrusion granulation showed a higher tensile strength, lower friability, and lower disintegration time than those prepared from granules produced by high shear granulation. Paracetamol tablets obtained via extrusion granulation exhibited faster dissolution than those obtained via high shear granulation. For all lactose grades studied, extrusion granulation resulted in superior granule and tablet properties in comparison with those obtained by high shear granulation. These results indicate that extrusion granulation is more efficient than high shear granulation.