Background: Nanosized dry powder inhalers provide higher stability for poorly water-soluble drugs as compared with liquid formulations. However, the respirable particles must have a diameter of 1–5 μm in order to deposit in the lungs. Controlled agglomeration of the nanoparticles increases their geometric particle size so they can deposit easily in the lungs. In the lungs, they fall apart to reform nanoparticles, thus enhancing the dissolution rate of the drugs. Theophylline is a bronchodilator with poor solubility in water. Methods: Nanosized theophylline colloids were formed using an amphiphilic surfactant and destabilized using dilute sodium chloride solutions to form the agglomerates. Results: The theophylline nanoparticles thus obtained had an average particle size of 290 nm and a zeta potential of −39.5 mV, whereas the agglomerates were 2.47 μm in size with a zeta potential of −28.9 mV. The release profile was found to follow first-order kinetics (r 2 > 0.96). The aerodynamic characteristics of the agglomerated nanoparticles were determined using a cascade impactor. The behavior of the agglomerate was significantly better than unprocessed raw theophylline powder. In addition, the nanoparticles and agglomerates resulted in a significant improvement in the dissolution of theophylline. Conclusion: The results obtained lend support to the hypothesis that controlled agglomeration strategies provide an efficient approach for the delivery of poorly water-soluble drugs into the lungs.