Formulating poorly water-soluble drug, itraconazole (ITZ), as dry powder inhaler (DPI) may be more effective for the treatment of invasive pulmonary Aspergillosis than intravenous injection and oral administration. It is necessary to improve the dissolution of ITZ because the alveolar lining fluid is limited and thus the dissolution of ITZ in the lung may be slow and incomplete. However, too fast dissolution may result in over-absorption into the circulation and thus insufficient distribution in the lung. The purpose of this study is to understand the relationship between in-vitro dissolution and in-vivo distribution of ITZ from DPI formulations. Two DPI formulations (F1 and F2) with identical compositions and similar aerodynamic behaviors were fabricated by hot melt extrusion and thus jet-milling. ITZ was formulated with mannitol as fine solid crystal suspension system to effectively improve its dissolution. In-vitro dissolution tests and in-vivo pharmacokinetic studies indicated that F1 released faster than F2 under both sink and non-sink conditions, but exhibited a lower lung retention and higher plasma absorption than F2. These results suggested that although dissolution enhancement of poorly water-soluble drugs in pulmonary delivery may be necessary to overcome problems such as local irritation and quick elimination by macrophages, it may have an impact on the distribution of the drug between the lung and the plasma. A balance between airway dissolution and systemic absorption should be taken into consideration when developing DPI formulations of poorly water-soluble ITZ.