Most of the patients with asthma are found to be successfully treated with conventional therapy. However, there are a small proportion of asthmatic patients who fail to respond to corticosteroids even at high doses or with supplementary therapy. In addition, even high doses of corticosteroids have a minimal effect on the inexorable decline in lung function in COPD (chronic obstructive pulmonary disease) and only a small effect in reducing exacerbations. Corticosteroid-insensitivity therefore presents a profound management problem. Corticosteroids act through a cytosolic receptor [GR (glucocorticoid receptor)], which is activated and translocates to the nucleus. Once in the nucleus, it either binds to DNA and switches on the expression of anti-inflammatory genes or represses the activity of distinct signalling pathways such as NF-kappaB (nuclear factor kappaB), AP-1 (activator protein-1) or MAPKs (mitogen-activated protein kinases). This latter step requires the recruitment of co-repressor molecules. A failure to respond to corticosteroids may therefore result from lack of binding to GR, reduced GR expression, lack of co-repressor activity or enhanced activation of inflammatory pathways. These events can be modulated by oxidative stress or high levels of inflammatory cytokines, which may lead to a reduced clinical outcome. Understanding the molecular mechanisms of GR action, and inaction, may lead to the development of new anti-inflammatory drugs or reverse the relative corticosteroid-insensitivity that is characteristic of these diseases.