Matrix systems based on biocompatible and biodegradable polymers like the United States Food and Drug Administration (FDA)-approved polymer poly(DL-lactide-co-glycolide acid) (PLGA) are promising for the delivery of small interfering RNA (siRNA) due to favorable safety profiles, sustained release properties and improved colloidal stability, as compared to polyplexes. The purpose of this study was to design a dry powder formulation based on cationic lipid-modified PLGA nanoparticles intended for treatment of severe lung diseases by pulmonary delivery of siRNA. The cationic lipid dioleoyltrimethylammoniumpropane (DOTAP) was incorporated into the PLGA matrix to potentiate the gene silencing efficiency. The gene knock-down level in vitro was positively correlated to the weight ratio of DOTAP in the particles, and 73% silencing was achieved in the presence of 10% (v/v) serum at 25% (w/w) DOTAP. Optimal properties were found for nanoparticles modified with 15% (w/w) DOTAP, which reduced the gene expression with 54%. This formulation was spray-dried with mannitol into nanocomposite microparticles of an aerodynamic size appropriate for lung deposition. The spray-drying process did not affect the physicochemical properties of the readily re-dispersible nanoparticles, and most importantly, the in vitro gene silencing activity was preserved during spray-drying. The siRNA content in the powder was similar to the theoretical loading and the siRNA was intact, suggesting that the siRNA is preserved during the spray-drying process. Finally, X-ray powder diffraction analysis demonstrated that mannitol remained in a crystalline state upon spray-drying with PLGA nanoparticles suggesting that the sugar excipient might exert its stabilizing effect by sterical inhibition of the interactions between adjacent nanoparticles. This study demonstrates that spray-drying is an excellent technique for engineering dry powder formulations of siRNA nanoparticles, which might enable the local delivery of biologically active siRNA directly to the lung tissue.