Dry powder inhalation formulations have become increasingly popular for local and systemic delivery of small molecules and biotherapeutics. Powder formulations provide distinct advantages over liquid formulations such as elimination of cold chain due to room temperature stability, improved portability, and the potential for increasing patient adherence. To become a viable product, it is essential to develop formulations that are stable (physically, chemically and/or biologically) and inhalable over the shelf-life. Physical particulate properties such as particle size, morphology and density, as well as chemical properties can significantly impact aerosol performance of the powder. This review will cover these critical attributes that can be engineered to enhance the dispersibility of inhalation powder formulations. Challenges in particle engineering for biotherapeutics will be assessed, followed by formulation strategies for overcoming the hurdles. Finally, the review will discuss recent examples of successful dry powder biotherapeutic formulations for inhalation delivery that have been clinically assessed.