Colloidal drug delivery systems have been extensively investigated as drug carriers for the application of different drugs via different routes of administration. Systems, such as solid lipid nanoparticles, polymeric nanoparticles and liposomes, have been investigated for a long time for the treatment of various lung diseases. The pulmonary route, owing to a noninvasive method of drug administration, for both local and systemic delivery of an active pharmaceutical ingredient (API) forms an ideal environment for APIs acting on pulmonary diseases and disorders. Additionally, this route offers many advantages, such as a high surface area with rapid absorption due to high vascularization and circumvention of the first pass effect. Aerosolization or inhalation of colloidal systems is currently being extensively studied and has huge potential for targeted drug delivery in the treatment of various diseases. Furthermore, the surfactant-associated proteins present at the interface enhance the effect of these formulations by decreasing the surface tension and allowing the maximum effect. The most challenging part of developing a colloidal system for nebulization is to maintain the critical physicochemical parameters for successful inhalation. The following review focuses on the current status of different colloidal systems available for the treatment of various lung disorders along with their characterization. Additionally, different in vitro, ex vivo and in vivo cell models developed for the testing of these systems with studies involving cell culture analysis are also discussed.