Introduction: Dry powder inhalers (DPIs) are popular for pulmonary drug delivery. Various techniques have been employed to produce inhalation drug particles and improve the delivery efficiency of DPI formulations. Physical stability of these DPI formulations is critical to ensure the delivery of a reproducible dose to the airways over the shelf-life.Areas covered: This review focuses on the impact of solid-state stability on aerosolization performance of DPI drug particles manufactured by powder production approaches and particle engineering techniques. It also highlights the different analytical tools that can be used to characterize the physical instability originating from production and storage.Expert opinion: A majority of the DPI literature focuses on the effects of physico-chemical properties such as size, morphology and density on aerosolization. While little has been reported on the physical stability, particularly the stability of engineered drug particles for use in DPIs. Literature data have shown that different particle engineering methods and storage conditions may cause physical instability of dry powders for inhalation and can significantly change the aerosol performance. A systematic examination of physical instability mechanisms in DPI formulations is necessary during formulation development in order to select the optimum formulation with satisfactory stability. In addition, the use of appropriate characterization tools are critical to detect and understand physical instability during the development of DPI formulations.