Inhalable theophylline particles with various amounts of mannitol were prepared by combining wet milling in isopropanol followed by spray drying. The effect of mannitol as a co-milling agent on the micromeritic properties, solid state and aerosol performance of the engineered particles was investigated. Crystal morphology modelling and geometric lattice matching calculations were employed to gain insight into the intermolecular interactions that may influence the mechanical properties of theophylline and mannitol. The addition of mannitol facilitated the size reduction of the needle-like crystals of theophylline and also their assembly in microcomposites by forming a porous structure of mannitol nanocrystals wherein theophylline particles are embedded. The microcomposites were found to be in the same crystalline state as the starting material(s) ensuring their long-term physical stability upon storage. Incorporation of mannitol resulted in microcomposite particles with smaller size, more spherical shape and increased porosity. The aerosol performance of the microcomposites was markedly enhanced compared to the spray-dried suspension of theophylline wet milled without mannitol. Overall, wet co-milling with mannitol in an organic solvent followed by spray drying may be used as a formulation approach for producing respirable particles of water-soluble drugs or drugs that are prone to crystal transformation in an aqueous environment (i.e. formation of hydrates).