This paper deals with the development of guidance, navigation and control algorithms for a prototype of a miniature aerial delivery system capable of high-precision maneuvering and high touchdown accuracy. High accuracy enables use in precision troop resupply, sensor placement, urban warfare reconnaissance, and other similar operations. Specifically, this paper addresses the terminal phase, where uncertainties in winds cause most of the problems. The paper develops a six degree-offreedom model to adequately address dynamics and kinematics of the prototype delivery system and then reduces it to a two degrees-of-freedom model to develop a model predictive control algorithm for reference trajectory tracking during all stages. Reference trajectories are developed in the inertial coordinate frame associated with the target. The reference trajectory during terminal guidance, just prior to impact, is especially important to the final accuracy of the system. This paper explores an approach for generating reference trajectories based on the inverse dynamics in the virtual domain. The method results in efficient solution of a two-point boundary-value problem onboard the aerial delivery system allowing the trajectory to be generated at a high rate, mitigating effects of the unknown winds. This paper provides derivation of the guidance and control algorithms and present analysis through simulation.