Current approaches to encapsulate and deliver therapeutic compounds have focused on developing liposomal and biodegradable polymeric nanoparticles (NPs), resulting in clinically approved therapeutics such as Doxil/Caelyx and Genexol-PM, respectively. Our group recently reported the development of biodegradable core-shell NP systems that combined the beneficial properties of liposomal and polymeric NPs for controlled drug delivery. Herein we report the parameters that alter the biological and physicochemical characteristics, stability, drug release properties and cytotoxicity of these core-shell NPs. We further define scalable processes for the formulation of these NPs in a reproducible manner. These coreshell NPs consist of (i) a poly(D,L-lactide-co-glycolide) hydrophobic core, (ii) a soybean lecithin monolayer, and (iii) a poly(ethylene glycol) shell, and were synthesized by a modified nanoprecipitation method combined with self-assembly. Preparation of the NPs showed that various formulation parameters such as the lipid/polymer mass ratio and lipid/lipid-PEG molar ratio controlled NP physical stability and size. We encapsulated a model chemotherapy drug, docetaxel, in the NPs and showed that the amount of lipid coverage affected its drug release kinetics. Next, we demonstrated a potentially scalable process for the formulation, purification, and storage of NPs. Finally, we tested the cytotoxicity using MTT assays on two model human cell lines, HeLa and HepG2, and demonstrated the biocompatibility of these particles in vitro. Our data suggest that the PLGA-lecithin-PEG core-shell NPs may be a useful new controlled release drug delivery system.