Theophylline (dimethylxanthine) has been used to treat airway diseases for more than 80 years. It was originally used as a bronchodilator, but the relatively high doses required are associated with frequent side effects, so its use declined as inhaled β2-agonists became more widely used. More recently it has been shown to have antiinflammatory effects in asthma and chronic obstructive pulmonary disease (COPD) at lower concentrations. The molecular mechanism of bronchodilatation is inhibition of phosphodiesterase (PDE)3, but the antiinflammatory effect may be due to inhibition of PDE4 and histone deacetylase-2 activation, resulting in switching off of activated inflammatory genes. Through this mechanism, theophylline also reverses corticosteroid resistance, and this may be of particular value in severe asthma and COPD, wherein histone deacetylase-2 activity is reduced. Theophylline is given systemically (orally as slow-release preparations for chronic treatment and intravenously for acute exacerbations of asthma). Efficacy is related to blood concentrations, which are determined mainly by hepatic metabolism, which may be increased or decreased in several diseases and by concomitant drug therapy. Theophylline is now usually used as an add-on therapy in patients with asthma not well controlled on inhaled corticosteroids with or without long-acting β2-agonists and in patients with COPD with severe disease not controlled by bronchodilator therapy. Side effects are related to plasma concentrations and include nausea, vomiting, and headaches due to PDE inhibition and at higher concentrations to cardiac arrhythmias and seizures due to adenosine A1-receptor antagonism. In the future, low-dose theophylline may be useful in reversing corticosteroid resistance in COPD and severe asthma.