The main objective of this study was to test the hypothesis that inhaled nanocrystals of a highly lipophilic drug could be used as a novel approach for producing sustained pulmonary delivery. Curcumin acetate, an ester prodrug of curcumin, was utilized as a highly lipophilic model drug. Curcumin acetate was subjected to wet ball milling to produce different particle sizes of nanocrystals and microparticles, and the milled curcumin acetate was spray-dried to yield similar inhalable microparticles. Following intrapulmonary administration in rats, pharmacokinetic experiments indicated that curcumin acetate significantly extended the pulmonary absorption time by 7.2-fold compared to curcumin, possibly due to the high lipophilicity of the former. The biodistribution data showed that aerosolized curcumin acetate nanocrystals 123.7 nm in size not only prolonged pulmonary retention, with the AUC value of curcumin acetate being 7.62-fold higher than that of the microparticles 1120 nm in size, but also increased the local in vivo release rate by 3.3-fold and the local availability of converted curcumin by 25.1-fold. In addition, the improved local availability resulted in better pharmacological efficacy in a monocrotaline-induced rat model of pulmonary arterial hypertension. This study was the first to demonstrate that inhalable nanocrystals are a feasible means for the sustained pulmonary delivery of highly lipophilic drugs.