Recurrent Gram-negative bacterial infection is a significant cause of death in patients with bronchiectasis and severe chronic obstructive pulmonary disease (COPD). Nebulized colistin in cystic fibrosis has shown maintenance of pulmonary function and improved symptom scores. We prospectively followed 18 patients with chronic bronchial sepsis treated with nebulized colistin 30 mg daily. Mean decline in forced expiratory volume in 1 s was significantly slower following commencement of inhaled colistin (44 mL/year vs 104 mL/year, P = 0.035). Mean decline in forced vital capacity was also significantly slower following commencement of colistin (48 mL/year vs 110 mL/year, P = 0.033). Patient-reported quality of life improved following commencement of colistin (3.6 vs 6.2, P = 0.001). No patient had isolates resistant to colistin. No side-effects were reported by patients in the cohort. Use of inhaled colistin in the treatment of bronchiectasis and severe (COPD) in patients with recurrent Gram-negative infections is safe. Inhaled colistin may improve quality of life and slow decline in forced expiratory volume in 1 s and forced vital capacity.