Pulmonary delivery of drug-loaded nanoparticles is a novel approach for lung cancer treatment and the conjugation of nanoparticles to a targeting ligand further promotes specificity of the carrier cargo to cancer cells. Notably, the epithelial cell adhesion molecule (EpCAM, CD326) is over expressed in lung cancer. Here, we report the safety and proof-of-concept efficacy of drug-loaded nanoparticles and EpCAM immunonanoparticles in a c-Raf transgenic lung cancer model. PEG-PLA nanoparticles and immunonanoparticles were prepared whereby paclitaxel palmitate (Pcpl) was incorporated as a medication for its common use in lung cancer treatment. Four doses of aerosolized nanoparticle formulations or vehicle were endotracheally administered to mice by consecutive or alternate regimes. Pulmonary delivery of drug loaded nano- and/or immunonanoparticle formulations elicited mild inflammation as evidenced by the slightly increased neutrophil and activated macrophage counts in bronchoalveolar lavage. No evidence for pulmonary toxicity following treatment with either blank or drug-loaded nano- and/or immunonanoparticles was observed. Proof-of-concept efficacy was determined by serial CT scanning and histopathology. Animals treated with either EpCAM antibody or Pcpl solution or drug loaded nano- or immunonanoparticles inhibited disease progression. Conversely, disease progression was noted with vehicle treated animals with nearly 30% loss of their aerated lung volume. Importantly, treatment of mice with either Pcpl or EpCAM antibody solution caused 80% mortality and/or haemorrhage, respectively, thus causing unacceptable toxicity. In contrast, the survival of animals treated with either nano- or immunonanoparticles was 60 and 70%, respectively. Taken collectively, pulmonary delivered drug-loaded nano- and EpCAM immunonanoparticles were well tolerated and can be considered a promising strategy for improving lung cancer treatment.