The benefits of intensive insulin therapy in the prevention of complications in patients with diabetes mellitus are now well established. However, the current methods of insulin administration fall well short of the ideal. Consequently, alternative routes of insulin administration have been investigated. The pulmonary route has received the most attention, helped by advances in inhaler devices and insulin formulation technology. As a result, several insulin inhalation systems are at varying stages of development, with one already filed for marketing approval in Europe. Knowledge of the pharmacokinetic and pharmacodynamic characteristics of the various inhaled insulin formulations will help to determine their positioning in current and evolving diabetes treatment strategies. For instance, a rapid onset and short duration of action would be desirable for use in postprandial glucose control. Pharmacokinetic studies with inhaled insulin reveal that serum insulin concentrations peak earlier and decay more rapidly following inhalation compared with subcutaneously administered regular insulin, and pharmacodynamic studies measuring glucose infusion rate under euglycaemic glucose clamp show corresponding rapid changes in glucose control. Furthermore, intrapatient variability in the pharmacokinetics and pharmacodynamics of inhaled insulin is low; variability is similar to (or perhaps less than) that seen when insulin is administered subcutaneously. Estimates of the bioavailability and bioefficacy achievable with the current inhalation systems are typically in the region of 10% of that experienced with subcutaneously administered insulin. Most of the losses are in the device, mouth and throat, with approximately 30-50% of the insulin deposited in the lungs being absorbed. Clinical experience to date indicates that inhaled insulin has the potential to be an effective treatment in patients with diabetes, and that it may have particular utility in the treatment of postprandial hyperglycaemia.