Lactose is the most commonly used excipient in carrier-based dry powder inhalation (DPI) formulations. Numerous inhalation therapies have been developed using lactose as a carrier material. Several theories have described the role of carriers in DPI formulations. Although these theories are valuable, each DPI formulation is unique and are not described by any single theory. For each new formulation, a specific development trajectory is required, and the versatility of lactose can be exploited to optimize each formulation. In this review, recent developments in lactose-based DPI formulations are discussed. The effects of varying the material properties of lactose carrier particles, such as particle size, shape, and morphology are reviewed. Owing to the complex interactions between the particles in a formulation, processing adhesive mixtures of lactose with the active ingredient is crucial. Therefore, blending and filling processes for DPI formulations are also reviewed. While the role of ternary agents, such as magnesium stearate, has increased, lactose remains the excipient of choice in carrier-based DPI formulations. Therefore, new developments in lactose-based DPI formulations are crucial in the optimization of inhalable medicine performance.