Drug-encapsulated biodegradable polymeric nanoparticles are suitable for therapeutic molecule delivery to the lungs. The current study sought to encapsulate a hydrophilic drug (theophylline) and a lipophilic drug (budesonide) in poly(lactic acid) (PLA) nanoparticles for pulmonary drug delivery. PLA nanoparticles were created using a double emulsification solvent diffusion method and were evaluated for particle size, zeta potential, drug loading, in vitro drug release, interactions with an airway epithelial cell line (16HBE14o-), and in vitro deposition properties upon nebulization. The spherically-shaped mono- and co-encapsulated PLA nanoparticles had particle sizes ranging from 190 to 400 nm and a zeta potential ranging from 10 to 16mV. Sustained drug release from nanoparticles into a mixture of simulated lung fluid and methanol (1:1) was observed over 24 hours when measured using Franz diffusion cells and when assessed for permeability using 16HBE14o-cells. After 24 hours of exposure to drug-encapsulated nanoparticles at nebulized concentrations, there was no significant reduction in cell viability (p > 0.05). Nebulization of co-encapsulated nanoparticles yielded a fine particle fraction of 75% for theophylline and 48% for budesonide, respectively. Based on these findings, it is possible to conclude that budesonide and theophylline drug-loaded PLA nanoparticles are appropriate drug delivery systems for combination therapy of asthma and COPD