Coronavirus disease 2019 (COVID-19), due to infection by the severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2), is now causing a global pandemic. Aerosol transmission of COVID-19, although plausible, has not been confirmed by the World Health Organization (WHO) as a general transmission route. Considering the rapid spread of SARS-CoV-2, especially nosocomial outbreaks and other superspreading events, there is an urgent need to study the possibility of airborne transmission and its impact on the lung, the primary body organ attacked by the virus. Here, we review the complete pathway of airborne transmission of SARS-CoV-2 from aerosol dispersion in air to subsequent biological uptake after inhalation. In particular, we first review the aerodynamic and colloidal mechanisms by which aerosols disperse and transmit in air and deposit onto surfaces. We then review the fundamental mechanisms that govern regional deposition of micro- and nanoparticles in the lung. Focus is given to biophysical interactions between particles and the pulmonary surfactant film, the initial alveolar-capillary barrier and first-line host defense system against inhaled particles and pathogens. Finally, we summarize the current understanding about the structural dynamics of the SARS-CoV-2 spike protein and its interactions with receptors at the atomistic and molecular scales, primarily as revealed by molecular dynamics simulations. This review provides urgent and multidisciplinary knowledge toward understanding the airborne transmission of SARS-CoV-2 and its health impact on the respiratory system.