Pulmonary delivery of anti-cancer drugs in the form of nanoparticulate dry powders is considered a promising modality for treating lung cancer. However, it is not known whether the pharmacodynamics and pharmacokinetics of nano-preparations are altered after co-spray drying. In this study, we compared the physicochemical property, anti-cancer activity, tumor targeting and pharmacokinetic behavior of docetaxel-loaded folic acid-conjugated liposomes (LPs-DTX-FA) with those of dry powder prepared by co-spray-drying LPs-DTX-FA. The particle size and PDI after re-dispersion of the powder were increased. The re-dispersed liposomes showed increased cellular uptake via micropinocytosis and exhibited higher cytotoxicity than LPs-DTX-FA. Tumor targeting of re-dispersed liposomes was less effective compared with LPs-DTX-FA but the metabolism of re-dispersed liposomes was decreased. Tracheal administration resulted in a 45-fold higher concentration of docetaxel in the lung of Sprague Dawley rats at 30 min as compared with intravenous administration. Our results indicated that co-spray drying did change the properties, while tracheal administration of the dry powder provided higher drug exposure at the tumor site without increasing the exposure of other organs. Thus, inhaled dry powders might be clinically effective for treatment of lung cancer.