We devised an aerosol based demethylation therapy to achieve therapeutic efficacy in premalignant or in situ lesions of lung cancer, without systemic toxicity. Optimum regimens of aerosolized azacytidine (Aza) were designed and used in orthotopic human non-small cell lung cancer xenograft models. The therapeutic efficacy and toxicity of aerosol Aza were compared with intravenously administered Aza. We observed that 80% of the droplets of the aerosol Aza measured ∼0.1–5 microns, which resulted in deposition in the lower bronchial airways. An animal model that phenocopies field carcinogeneisis in humans was developed by intratracheal inoculation of the human lung cancer cells in mice, thus resulting in their distribution throughout the entire airway space. Aerosolized Aza significantly prolonged the survival of mice bearing endo-bronchial lung tumors. The aerosol treatment did not cause any detectable lung toxicity or systemic toxicity. A pre-pharmacokinetic study in mice demonstrated that lung deposition of aerosolized Aza was significantly higher than the intravenous route. Lung tumors were resected after aerosol treatment and the methylation levels of 24 promoters of tumor-suppresser genes related to lung cancer were analyzed. Aerosol Aza significantly reduced the methylation level in 9 of these promoters and reexpressed several genes tested. In conclusion, aerosol Aza at non-cytotoxic doses appears to be effective and results in DNA demethylation and tumor suppressor gene re-expression. The therapeutic index of aerosol Aza is >100-fold higher than that of intravenous Aza. These results provide a preclinical rationale for a phase I clinical trial of aerosol Aza to be initiated at our Institution.