Abstract Hot melt granulation involves particle enlargement with a binder that is in its molten state during processing with accompanying solids. Fundamental studies of the technique have been presented for high shear mixers and fluidized bed systems in the literature but with the recent interest in twin screw extrusion machinery by the pharmaceutical industry for continuous granulation, further investigation was necessary to determine if similar mechanisms of wetting and growth were applicable to this new approach. Two different polyethylene glycols were used for the present study as model binders at 10–20% concentrations to melt granulate α-lactose monohydrate in a co-rotating intermeshing twin screw extruder for operating temperatures between 80 °C and 120 °C. Three different screw configurations were tested, primarily composed of conveying elements with an incremental number of kneading blocks included to vary the intensity of mixing as well as the residence time of particulates inside the extruder. Characterization of the granule size, granule strength and binder concentration in the final product was done to determine the mechanism, which appeared to be best described as an Immersion type.