Development of dry powder aerosol delivery system involves powder production, formulation, dispersion, delivery, and deposition of the powder aerosol in the airways. Insufficiency of conventional powder production by crystallization and milling has led to development of alternative techniques. Over the last decade, performance of powder formulations has been improved significantly through the use of engineered drug particles and excipient systems which are (i) of low aerodynamic diameters (being porous or of low particle density), and/or (ii) less cohesive and adhesive (via corrugated surfaces, low bulk density, reduced surface energy and particle interaction, hydrophobic additives, and fine carrier particles). Early insights into particle forces and surface energy that help explain the improvement have been provided by analytical techniques such as the atomic force microscopy (AFM) and inverse gas chromatography (IGC). Relative humidity is critical to the performance of dry powder inhaler (DPI) products via capillary force and electrostatic interaction. Electrostatic charge of different particle size fractions of an aerosol can now be measured using a modified electrical low-pressure impactor (ELPI). Compared with powders, much less work has been done on the inhaler devices at the fundamental level. Most recently, computational fluid dynamics has been applied to understand how the inhaler design (such as mouthpiece, grid structure, air inlet) affects powder dispersion. The USP throat is known to under-represent the oropharyngeal deposition of DPI aerosols. Studies using magnetic resonance imaging (MRI) model casts have been undertaken to explain the inter- and intra- subject variation in oropharyngeal deposition. Most of the lung deposition studies performed on commercial products did not allow a thorough understanding of the determinants affecting in vivo lung deposition. A more systematic approach would be necessary to build a useful database on the dependence of lung deposition on the breathing parameters, inhaler design, and powder formulation properties.