Although theophylline has side effects when used in bronchodilator doses, increasing evidence shows that it has significant antiinflammatory effects in chronic obstructive pulmonary disease at lower plasma concentrations. These antiinflammatory effects are unlikely to be accounted for by phosphodiesterase inhibition or adenosine receptor antagonism, which require higher concentrations. There is now evidence that theophylline at low therapeutic concentrations is an activator of histone deacetylases and that this activation enhances the antiinflammatory effect of corticosteroids. There appears to be a marked reduction in histone deacetylase-2 in macrophages and peripheral lung of patients with chronic obstructive pulmonary disease, which accounts for amplified inflammation and steroid resistance. Theophylline has been shown to restore steroid sensitivity in vitro. The effect of theophylline on histone deacetylase activity appears to be enhanced by oxidative stress. The mechanism whereby theophylline activates histone deacetylase is not yet known, but it does not involve other known actions of theophylline that account for its side effects. Better understanding of the molecular basis for the action of theophylline might lead to the development of novel drugs.