Objective: We have previously shown that aerosolized liposomes with dipalmitoyl phosphatidylcholine (DPPC) enhance the pulmonary absorption of encapsulated insulin. In this study, we aimed to compare insulin encapsulated into the liposomes versus co-administration of empty liposomes and unencapsulated free insulin, where the DPCC liposomes would serve as absorption enhancer.Significance: The present study provides the useful information for development of noninvasive treatment of diabetes.Methods: Co-administration of empty DPPC liposomes and unencapsulated free insulin was investigated in vivo to assess the potential enhancement in protein pulmonary absorption. Co-administration was compared to DPPC liposomes encapsulating insulin, and free insulin.Results: DPPC liposomes enhanced the pulmonary absorption of unencapsulated free insulin; however, the enhancing effect was lower than that of the DPPC liposomes encapsulating insulin. The mechanism of the pulmonary absorption of unencapsulated free insulin by DPPC liposomes involved the opening of epithelial cell space in alveolar mucosa, and not mucosal cell damage, similar to that of the DPPC liposomes encapsulating insulin. In an in vitro stability test, insulin in the alveolar mucus layer that covers epithelial cells was stable. These findings suggest that, although unencapsulated free insulin spreads throughout the alveolar mucus layer, the concentration of insulin released near the absorption surface is increased by the encapsulation of insulin into DPPC liposomes and the absorption efficiency is also increased.Conclusion: We revealed that the encapsulation of insulin into DPPC liposomes is more effective for pulmonary insulin absorption than co-administration of DPPC liposomes and unencapsulated free insulin.