Airway cellular dysfunction is a differentiating feature of severe asthma in children that may be related to an imbalance of the antioxidant, glutathione (GSH). We hypothesized that oxidation of GSH to glutathione disulfide (GSSG) in the epithelial lining fluid (ELF) of children with severe asthma would contribute to altered airway macrophage (AM) GSH homeostasis and AM cellular dysfunction. Bronchoalveolar lavage (BAL) was performed in 64 asthmatic children (severe asthma, n = 43). GSH, GSSG, markers of lipid peroxidation and DNA oxidation, and IL-8 were quantified in the BAL supernatant. GSH, GSSG, activities of histone deacetylase (HDAC) and histone acetyltransferase, apoptosis, and phagocytosis were assessed in isolated AMs. Children with severe asthma had increased GSSG, lipid peroxidation, byproducts of DNA oxidation, and inflammation in the ELF. This imbalance of GSH homeostasis was also noted intracellularly within the AMs and was associated with decreased HDAC activities, increased apoptosis, and impaired phagocytosis. In vitro GSH supplementation inhibited apoptosis and rescued phagocytosis in children with severe asthma. Severe asthma in children is characterized by altered airway and intracellular AM GSH homeostasis that translates to impaired AM function. Interventions to restore airway GSH homeostasis may be warranted in children with severe asthma.