Understanding the solid-state transitions of active pharmaceutical ingredients (APIs) is essential for quality control since differences in their forms affect the bioavailability of APIs. Terahertz (THz) frequency-domain spectroscopy is suitable for such an application since it can sensitively probe the lattice phonon modes originating in the crystal structures. THz absorption spectra were obtained for ezetimibe (EZT) and ezetimibe monohydrate (EZT-MH), which have similar crystalline structures and belong to the same space group. The observed absorption spectrum of EZT matched well with the solid-state density functional theory (ss-DFT)-simulated spectrum for the structures at 0 K and room temperature (modeled using constrained unit cell volumes). However for EZT-MH, the ss-DFT spectrum of the room-temperature structure showed better correlation with the experimental THz spectrum than that of the simulated spectrum of the 0 K structures, suggesting that the EZT-MH crystal has greater anharmonic character. Gibbs free-energy curves were calculated, and EZT-MH was found to be more stable than pure EZT and water in a broad temperature range. The hydrate stability may be influenced by the existence of more hydrogen bonds in EZT-MH. The hydration and dehydration of EZT in a pure API tablet and formulation tablets were monitored using a THz spectrometer with a humidity-controlled sample chamber. The effect of the excipient in the formulation tablet on hydration was successfully confirmed by showing that the solid-state transition of the API with excipients is significantly slower than that without it. Under a relative humidity of 60%, hydration of EZT in a pure EZT tablet occurred in 200 min, while the hydration of EZT in a formulation tablet was 50 times slower.