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With the increase in respiratory conditions including lung cancer post covid-19 pandemic, drug-loaded nanoparticulate dry powder inhalers (DPIs) can facilitate targeted lung delivery as a patient-friendly, non-invasive method. The aim of this work was to synthesise and optimise iron oxide nanoparticles (IONPs) containing dactinomycin as a model drug, using Quality by Design principles. Chitosan and sodium alginate were investigated as polymeric coatings. The mass median aerodynamic diameter (MMAD), fine particle fraction (FPF), burst-effect (BE), entrapment-efficiency and the emitted-dose (ED) were investigated in initial screening studies and outcomes used to set up a Design of Experiments. Results revealed that chitosan IONPs were superior to that of sodium alginate in delivering DPI with optimal properties [ED (89.9%), FPF (59.7%), MMAD (1.59 µm) and BE (12.7%)]. Design space for targeted IONPs included formulations containing 2.1-2.5% dactinomycin and 0.5-0.9% chitosan. Differential scanning calorimetry and X-ray diffraction and SEM-EDS analysis revealed effective formation of IONPs, and TEM images revealed the production of spherical IONPs with particle size of 4.4 ± 0.77 nm. This work overcame the light sensitivity of dactinomycin to potentially target the high molecular weight drugs to the lungs, with controlled delivery based on a reduced burst effect.