Oral tadalafil (TD) proved promising in treating pediatric pulmonary arterial hypertension (PAH). However, to ensure higher efficacy and reduce the systemic side effects, targeted delivery to the lungs through nebulization was proposed as an alternative approach. This poorly soluble drug was previously dissolved in nanoemulsions (NEs). However, the formulations could not resist aqueous dilution, which precluded its dilution with saline for nebulization. Thus, the current study aimed to modify the previous systems into dilutable TD-NEs and assess their suitability for a pulmonary application. In this regard, screening of various excipients was conducted to optimize the former systems; different formulations were selected and characterized in terms of physicochemical properties, nebulization performance, stability following sterilization, and biocompatibility. Results showed that the optimal system comprised of Capmul-MCM-EP:Labrafac-lipophile (1:1) (w/w) as oil, Labrasol:Poloxamer-407 (2:1) (w/w) as surfactant mixture (Smix) and water. The optimum formulation P2TD resisted aqueous dilution, exhibited reasonable drug loading (2.45 mg/mL) and globule size (25.04 nm), acceptable pH and viscosity for pulmonary administration, and could be aerosolized using a jet nebulizer. Moreover, P2TD demonstrated stability following sterilization and a favorable safety profile confirmed by both in-vitro and in-vivo toxicity studies. These favorable findings make P2TD promising for the treatment of pediatric PAH.