This study investigates to what extent an aqueous two-phase system (ATPS) can encapsulate and protect the secondary structure of a protein during spray drying. The ATPSs contained polyvinyl alcohol (PVA) and dextran solutions, in different proportions. A model protein, bovine serum albumin (BSA) and, in some experiments, trehalose were added to the ATPS prior to spray drying. Electron spectroscopy for chemical analysis (ESCA), differential scanning calorimetry (DSC), UV spectrophotometry, size exclusion high-performance liquid chromatography (SEC-HPLC) and Fourier transform infrared spectroscopy (FTIR) were used for analysis of solid and reconstituted samples. The anticipated function of the ATPS was to improve the stability of the protein by preventing interactions with the air–liquid interface during drying and by improving the encapsulation of the protein in the dried powder. BSA was found to preferentially partition to the dextran phase and in the absence of PVA, BSA dominated the powder surface. In samples containing PVA, the polymer mainly covered the powder surface, even though the dextran-rich phase was continuous, thus preventing protein surface interactions and providing improved encapsulation. However, PVA was found to cause partial loss of the native structure of BSA although the protein was well encapsulated during spray drying