Etoposide (ETP) is a topoisomerase II enzyme inhibitor with excellent activity against small cell lung cancer (SCLC). However, the low aqueous solubility, short half-life, and nonspecific toxicities of ETP limit its bioavailability and efficacy. Hence, a nebulized formulation of ETP-loaded proniosomes (ELP) was developed to enhance the sustainability, bioavailability, targeting, and efficacy of ETP as a potential therapy for SCLC. Various ELP formulations were fabricated using the Box-Behnken design and then assessed in vitro to determine the optimized ELP formulation. The optimized ELP formulation was subsequently assessed for its cytotoxicity, pharmacokinetics, biodistribution, and toxicity investigations. ELP formulation had a surfactant with HLB of 6.84, a ratio of cholesterol/surfactant of 1.52, and a ratio of surfactant/lactose of 4.01 was chosen as an optimized formulation. In comparison to free ETP, the optimized ELP formulation increased the sustainability of ETP by 2.55-fold and showed to induce substantial apoptosis in the A-549 lung cancer cell line. The optimized ELP formulation markedly increased the bioavailability of ETP by 6.71-fold and boosted its targeting capability. The nebulized administration of the optimized ELP formulation did not induce toxicity in healthy animals. Nebulized administration of the optimized ELP formulation could be a safe and potential therapy for SCLC.