Milk has been used as a vehicle for the delivery of antimalarial drugs during clinical trials to test for a food effect and artefenomel (OZ439) showed enhanced oral bioavailability with milk. However, the nature of the interaction between milk and OZ439 in the gastrointestinal tract remains poorly understood. To understand the role of milk digestion on the solubilization of OZ439 and polymorphism, we conducted real-time monitoring of crystalline drug in suspension during in vitro intestinal lipolysis of milk containing OZ439 using synchrotron X-ray scattering. OZ439 formed an unstable solid state intermediate free base form (OZ439-FB form 1) at intestinal pH and was partially solubilized by milk fat globules prior to lipolysis. Dissolution of the free base form 1 and re-crystallization of OZ439 in a more stable polymorphic form (OZ439-FB form 2) occurred during in vitro lipolysis in milk. Simply stirring the milk/drug suspension in the absence of lipase or addition of lipase to OZ439 in a lipid-free buffer did not induce this polymorphic transformation. The formation of OZ439-FB form 2 was therefore accelerated by the solubilization of OZ439-FB form 1 during the digestion of milk. Our findings confirmed that although crystalline precipitates of OZ439-FB form 2 could still be detected after in vitro digestion, milk-based lipid formulations provided a significant reduction in crystalline OZ439 compared to lipid-free formulations, which we attribute to the formation of colloidal structures. Milk may therefore be particularly suited as a form of lipid-based formulation (LBF) for co-administration with OZ439, from which both an enhancement in OZ439 oral bioavailability and the delivery of essential nutrients should result.