Andrographolide (AG) is a chemical entity from traditional Chinese herbs and its oral pills have been applied to the treatment of respiratory inflammation. Here we report pulmonary delivery of liposomal AG dry powder inhalers (LADPIs) for treatment of Staphylococcus aureus-induced pneumonia. AG liposomes were prepared with the injection method and then freeze-dried for preparation of LADPIs. AG liposomes were small and stable with a mean size of 77.91 nm and a zeta potential of −56.13 mV. Liposomes were well recovered after re-hydration of LADPIs that were suitable for pulmonary delivery with a mass mean aerodynamic diameter (MMAD) of 4.87 μm and a fine particle fraction (FPF) of 23.03%. However, the MMAD and FPF of AG powders were 10.14 μm and 8.37%, respectively. The in vitro anti-S. aureus effects of AG powders and LADPIs were investigated, but were not found. They were intratracheally sprayed into the rat lungs for treatment of S. aureus pneumonia. Surprisingly, LADPIs showed a stronger anti-S. aureus pneumonic effect in vivo, than AG at a ten-fold dose or than an antibiotic, penicillin. LADPIs significantly decreased many pro-inflammatory cytokines including TNF-α, IL-1. Furthermore, the phosphorylation of IκB-α in the nuclear factor-κB (NF-κB) pathway was also remarkably inhibited. AG regulated the immune reaction to maintain the antibacterial effect while downregulating inflammatory response so that AG showed a strong effect on bacterial pneumonia. LADPIs are a promising pulmonary delivery medicine for the treatment of bacterial pneumonia.