The biphasic rhodium catalyzed hydroformylation of water insoluble olefins in the presence of chemically modified beta -cyclodextrins has been investigated. The influence of various parameters, such as the nature of the beta -cyclodextrin, the concentrations of phosphine or cyclodextrin and the temperature is illustrated using 1-decene as a model substrate. The formation of inclusion complexes between the different components of the system is also discussed on the basis of NMR experiments. The results indicate that the chemically modified cyclodextrins (CyDs) must not be considered only as inverse phase transfer catalysts but also as compounds which, by trapping the water soluble ligand, can modify the equilibria between the different catalytic species.