Spray drying is a well-established technology to produce inhalable dry powders. However, the amorphous nature of the particles typically obtained from the process can lead to physically and chemically unstable products. The purpose of this study was to investigate whether spray-drying could be used as a manufacturing method to produce co-amorphous drug amino acid powders with high physical stability and inhalable particulate properties. Budesonide (BUD), a compound for the treatment of lung inflammation, was co-spray-dried at a 1:1 M ratio with arginine (ARG) to produce co-amorphous powders. Two experimental factors, the solid concentration (0.85, 1.00 and 1.13%, w/v) and the ethanol concentration (55 and 75%, v/v) of the feed solution were varied to investigate the formation of co-amorphous BUD-ARG. X-ray powder diffraction (XRPD), modulated temperature differential scanning calorimetry (mDSC) and attenuated total reflectance Fourier transform infrared spectroscopy (ATR-FTIR) were used for solid state characterization. The particle morphology, the median mass aerodynamic diameter and the aerodynamic properties of the resulting co-amorphous powders were investigated using scanning electron microscopy (SEM), an aerodynamic particle sizer (APS), and a next generation impactor (NGI), respectively. Furthermore, the physical stability of the obtained dry powder was examined. The co-spray-dried BUD-ARG samples prepared within the experimental range were predominantly amorphous. However, it was observed that while using the feed solution with both high solid and ethanol concentrations, some residual crystallinity related to budesonide was observed. The formation of co-amorphous BUD-ARG, rather than two separate amorphous phases, was confirmed by mDSC analyses. In addition, FTIR analyses indicated that hydrogen bonding occurs between the carbonyl groups of BUD and the amide groups of ARG in the co-amorphous BUD-ARG mixtures. The NGI results indicated that the particulate properties of the co-spray-dried co-amorphous BUD-ARG were at an inhalable range, with emitted doses >80%, and fine particle fractions >50%. In addition, the co-amorphous BUD-ARG was more physically stable than spray-dried BUD when stored at room temperature under dry conditions. This study demonstrated that spray drying is a useful manufacturing approach to produce physically stable co-amorphous dry powders for inhalation purposes.