Lung cancer is the main cause of cancer-related mortality globally. Erlotinib is a tyrosine kinase inhibitor, affecting both cancerous cell proliferation and survival. The emergence of oncological nanotechnology has provided a novel drug delivery system for erlotinib. The aims of this current investigation were to formulate two different polyamidoamine (PAMAM) dendrimer generations—generation 4 (G4) and generation 5 (G5) PAMAM dendrimer—to study the impact of two different PAMAM dendrimer formulations on entrapment by drug loading and encapsulation efficiency tests; to assess various characterizations, including particle size distribution, polydispersity index, and zeta potential; and to evaluate in vitro drug release along with assessing in situ human lung adenocarcinoma cell culture. The results showed that the average particle size of G4 and G5 nanocomposites were 200 nm and 224.8 nm, with polydispersity index values of 0.05 and 0.300, zeta potential values of 11.54 and 4.26 mV of G4 and G5 PAMAM dendrimer, respectively. Comparative in situ study showed that cationic G4 erlotinib-loaded dendrimer was more selective and had higher antiproliferation activity against A549 lung cells compared to neutral G5 erlotinib-loaded dendrimers and erlotinib alone. These conclusions highlight the potential effect of cationic G4 dendrimer as a targeting-sustained-release carrier for erlotinib.