Lung microenvironment is altered by injurious stimuli resulting in alveolar epithelial cell (AEC) injury, epithelial mesenchymal transition (EMT) and aberrant remodeling. This pathogenetic process reduces the drug amount delivered to the target site, both neoplastic and non-neoplastic and necessitates the use of nanocarriers based targeted drug delivery. Pirfenidone, a partially water-soluble drug was encapsulated; poly(ε-caprolactone) nanoparticles (PCL-NPs) and to MePEG-PCL diblock by nanoprecipitation. Their physicochemical properties were characterized by Nanosight, DLS, Zeta potential, TEM, FTIR and 1H NMR. Drug encapsulation and release efficiency was evaluated by HPLC. Their efficacy in modulating TGF-β1, SMAD-2,3,5 signaling and regulating EMT was assessed in-vitro on A-549 cells by measuring Vimentin and E-cadherin mRNA levels. The pirfenidone loaded PCL and MePEG-PCL-NPs were spherical with uniform particle size (~150 nm), polydispersity index (0.095–0.224), high encapsulation efficacy (50–75 %), drug loading capacity (20 %) and good colloidal stability. Bleomycin induced EMT of AECs with an upregulation of mesenchymal protein, vimentin and loss of epithelial marker, E-cadherin. Bimodal increase in TGFβ1, SMAD-2,3.5 genes at 4 h and then at 24 & 48 h was seen. The pirfenidone nanoformulations efficiently reversed EMT by downregulation of TGF-β1, SMAD-2,3,5, Vimentin and upregulation of E-cadherin gene. The effect of nanoformulations was similar to standard dose pirfenidone.