Pirfenidone (PFND) is a recommended oral drug used to treat idiopathic pulmonary fibrosis, but have low bioavailability and high hepatotoxicity. The study, therefore, seeks to improve the therapeutic activities of the drug via increased bioavailability and reduced associated side effects by developing a novel drug delivery system.The electrostatic spray technology was used to prepare a sustained release pirfenidone-loaded microsphere dry powder inhalation with PEG-modified chitosan (PFND-mPEG-CS-MS). The entrapment efficiency, drug loading, and in vitro cumulative drug release rate (at 24 h and with a sustained release effect) of PFND-mPEG-CS-MS were 77.35±3.01%, 11.45±0.64%, and 90.4%, respectively. The Carr's index of PFND-mPEG-CS-MS powder was 17.074±2.163% with a theoretical mass median aerodynamic diameter (MMADt) of 0.99±0.07 μm, and a moisture absorption weight gain rate (Rw) of 4.61±0.72%. The emptying rate, pulmonary deposition rate (fine particle fraction) and actual mass median aerodynamic diameter (MMADa) were 90%∼95%, 48.72±7.04% and 3.10±0.16 μm, respectively. MTT bioassay showed that mPEG-CS-MS (200 μg/mL) had good biocompatibility (RGR = 90.25%) and PFND-mPEG-CS-MS (200 μg/mL) had significant inhibitory activity (RGR = 49.82%) on fibroblast growth. The pharmacokinetic data revealed that the t1/2 (5.02 h) and MRT (10.66 h) of PFND-mPEG-CS-MS were prolonged compared with the free PFND (t1/2, 1.67 h; MRT, 2.71 h). The pharmacodynamic results also showed that the formulated-drug group had slight pathological changes, lower lung hydroxyproline content, and reduced hepatotoxicity compared with the free-drug group. The PFND-mPEG-CS-MS further significantly down-regulated TGF-β cytokines, Collagen I, and α-SMA protein expression levels compared with the free drug. The findings indicated that the PFND-mPEG-CS-MS had a good sustained release effect, enhanced bioavailability, decreased toxicity, and increased anti-fibrotic activities.