Background With the aim of preparing a more effective, safe and economical vaccine for tuberculosis, inhalable live mycobacterium formulations were evaluated. Methods Alginate particles in the size range of 2–4 μm were prepared by encapsulating live Bacille Calmette–Guérin (BCG) and “ Mycobacterium indicus pranii” (MIP). These particles were characterized for their size, stability and release profile. Mice were immunized with liquid aerosol or dry powder aerosol (DPA) alginate encapsulated mycobacterium particles and their in-vitro recall response and infection with mycobacterium H37Rv were investigated. Results It was found that the DPA of alginate encapsulated mycobacterium particles invoked superior immune response and provided higher protection in mice than the liquid aerosol. The BCG encapsulated in alginate particles (BEAP) and MIP encapsulated in alginate particles (MEAP) were engulfed by bone marrow dendritic cells (BMDCs) and co-localized with lysosome. The MEAP/BEAP activated BMDCs exhibited higher chemotaxis movement and had enhanced ability of antigen presentation to T cells. The in-vitro recall response of BEAP/MEAP immunized mice when compared in terms of proliferation index and Interferon gamma (IFN-gamma) released by splenocytes and mediastinal lymph node cells was found to be higher than mice immunized by liquid aerosol of BCG/MIP. Finally, different groups of immunized mice were infected with M. tb H37Rv and after 16 weeks the Colony forming units (CFUs) in lung and spleen estimated. The bacilli burden in the BEAP/MEAP immunized mice was significantly less than the respective liquid aerosol immunized mice and the histopathology of BEAP/MEAP immunized mice lungs showed very little damage. Conclusions These inhale-able vaccines formulation of alginate coated live mycobacterium are more immunogenic as compared to the aerosol of bacilli and they provide better protection in mice when infected with H37Rv. Electronic supplementary material The online version of this article (10.1186/s12879-019-4157-2) contains supplementary material, which is available to authorized users.