Inhaled recombinant secretory leukocyte protease inhibitor (rSLPI) has shown potential for the treatment of inflammatory lung conditions. Rapid inactivation of rSLPI by cathepsin L (Cat L) and rapid clearance from the lungs has limited clinical efficacy to date. Previous studies by us have shown that encapsulation of rSLPI within1,2-dioleoyl-sn-glycero-3-[phospho-L-serine]/cholesterol (DOPS/Chol) liposomes protects rSLPI against Cat L inactivation in vitro. Liquid DOPS-rSLPI preparations were found to be unstable upon long-term storage and nebulisation. The aim of this study was therefore to develop a method of manufacture for preparing DOPS-rSLPI liposomes as a dry powder for inhalation. DOPS-rSLPI dry powders were lyophilised and subsequently micronised with a novel micronisation aid. The effects of formulation and processing on rSLPI stability, activity, and uniformity of content within the powders were characterised. Using D-mannitol as the micronisation aid, dry powder particles in the inhalable size range (<5 μm) were prepared. By optimising process parameters, up to 54% of rSLPI was recovered after micronisation, of which there was no significant loss in anti-neutrophil elastase activity and no detectable evidence of protein degradation. Aerosolisation was achieved using a dry powder inhaler, and mass median aerodynamic diameter (MMAD) was evaluated after collection in a cascade impactor. Aerosolisation of the DOPS-rSLPI dry powder yielded 38% emitted dose, with 2.44 μm MMAD. When challenged with Cat L post-aerosolisation, DOPS-rSLPI dry powder was significantly better at retaining a protective function against Cat L-induced rSLPI inactivation compared to the aqueous DOPS-rSLPI liposome dispersion and was also more stable under storage.