A number of immunomodulating mechanisms are necessary to prevent uncontrolled inflammation in the lower respiratory tract. Proliferative responses of immune cells are tightly controlled in both bronchi and alveoli in the healthy lung. In diseases such as bronchial asthma, there is not only a partial failure of these mechanisms, but also an immune-deviation with a propensity towards a Th2-cell involvement. The role of alveolar macrophages (AM) controlling T- and B-cell activation in the lower respiratory tract is discussed by considering mainly published results. This review focuses on immunomodulating mechanisms exerted via cytokines, such as Interleukin-10 (IL-10), transforming growth factor-beta (TGF-beta), and Interleukin-1 receptor-antagonist (IL-1ra), prostaglandins, such as prostaglandin E2 (PGE2), and especially nitric oxide (NO). The Th1 and Th2 concept in asthma is introduced, being the best-described mechanism of immune-deviation in the lung. The possibility of re-inducing T-cell unresponsiveness is of particular interest. The physiological immunomodulating mechanisms used by AM are explained in detail, as they offer many possibilities for therapeutic immunomodulation. Special emphasis is put on the cGMP/phosphatase dependent, reversible mechanism of NO-mediated immunomodulation and differences in the activation of NO synthases between murine and human alveolar macrophages are mentioned.