Human breath contains many volatile metabolites. However, few breath tests are currently used in the clinic to monitor disease due to bottlenecks in biomarker identification. Here we engineered breath biomarkers for respiratory disease by local delivery of protease-sensing nanoparticles to the lungs. The nanosensors shed volatile reporters upon cleavage by neutrophil elastase, an inflammation-associated protease with elevated activity in lung diseases such as bacterial infection and alpha-1 antitrypsin deficiency. After intrapulmonary delivery into mouse models with acute lung inflammation, the volatile reporters are released and expelled in breath at levels detectable by mass spectrometry. These breath signals can identify diseased mice with high sensitivity as early as 10 min after nanosensor administration. Using these nanosensors, we performed serial breath tests to monitor dynamic changes in neutrophil elastase activity during lung infection and to assess the efficacy of a protease inhibitor therapy targeting neutrophil elastase for the treatment of alpha-1 antitrypsin deficiency. Volatile reporter molecules released by protease-sensing nanoparticles can serve as breath biomarkers for monitoring respiratory disease.