With the Pressure Swing Granulation (PSG), a fluidized bed binderless granulation method, jet-milled fine model drug powders of roughly 2 mum in diameter were mixed with lactose and successfully agglomerated into spherical soft granules to demonstrate that PSG is an effective granulation method for dry powder inhalation. The effects of both lactose particle size, which is supposed to be of either carriers or excipients for inhalants, and granule formulations on the product properties and their dispersion characteristics were investigated. To strengthen the granule-forming tendency without decreasing the carrier particle size, lactose particles' surface morphology was modified before granulation in a ball-milling pot with balls having their lowest milling size larger than the lactose particle size. By this modification, lactose particles of about 8.8 mum in mean diameter were successfully agglomerated without binders over the full range of mixing ratio with the model drug particles. An excellent dispersion property for inhalation was obtained with the PSG granules produced from the surface modified lactose and the PSG method is expected to add a new freedom in producing dry powder for inhalation.