Particle engineering of excipients, at sub-particulate level using co-processing, can provide high functionality excipients. NanoCrySP technology has been recently explored as a novel approach for the generation of nanocrystalline solid dispersion of poorly soluble drugs, using spray drying process. The purpose of the present study was to generate co-processed mannitol and sorbitol (SD-CSM) using NanoCrySP technology having similar composition to commercial co-processed excipient (Compressol® SM, CP). The characterization of excipients was performed to evaluate their various physicomechanical properties. The sub-micron crystallite size of sorbitol in the matrix of mannitol was determined using the Williamson-Hall equation and Halder-Wagner equation. The reduction in crystallite size of sorbitol and mannitol, lower melting point, and lower heat of fusion of SD-CSM could be responsible for excellent compactibility, better tabletability, and comparable compressibility with respect to CP. This was confirmed by the compressibility-tabletability-compactibility (CTC) profile and Heckel plot analysis. Overall, SD-CSM generated using NanoCrySP technology improved functionalities of excipients over CP and would be useful for direct compression application.