Theophylline and its derivatives have been used in the treatment of asthma for over 50 years, but since the advent of more potent bronchodilators their use has become cloaked in controversy. Their continued existence results from their undoubted usefulness in severe acute asthma, nocturnal asthma, childhood asthma and moderate to severe chronic airflow limitation, and because of habitual use by physicians in other situations. The precise mechanism of action of theophylline remains uncertain. The role of phosphodiesterase inhibition and adenosine antagonism has been reviewed and the clinical significance of the anti-inflammatory action of theophylline discussed. Theophylline has unpredictable metabolism when first administered, and continued monitoring of drug concentrations is essential. Commonly encountered adverse effects may occur at therapeutic serum concentrations, frequently necessitating drug withdrawal. The overlapping therapeutic and toxic theophylline serum ranges can lead to life-threatening adverse effects at the upper end of the therapeutic range, especially in the elderly in whom special precaution is required.