There are increased numbers of activated lymphocytes in the lungs of chronic obstructive pulmonary disease (COPD) patients. The clinical benefits of corticosteroids in COPD patients are limited. Our hypothesis is that lymphocytes play a role in this corticosteroid insensitivity. To investigate the effects of the corticosteroid dexamethasone on lung lymphocyte cytokine production from patients with COPD compared to controls. Cultured airway lymphocytes obtained by bronchoscopy from healthy non-smokers (HNS), smokers (S) and COPD patients were stimulated with phytohaemagglutinin (PHA) & phorbol myristate acetate (PMA), +/- dexamethasone. Supernatants were assayed for interleukin (IL)-2 and interferon (IFN)γ. Immunofluoresence was used to analyse changes in CD8 glucocorticoid receptor (GRα and GRβ) expression. The inhibition of PHA/PMA stimulated IFNγ production by dexamethasone was reduced in COPD patients compared to HNS (p < 0.05 at concentrations from 0.1-1 μM). There was also a significant reduction (p < 0.05) in the mean inhibitory effect at 1 μM in COPD patients (54.1%) compared to smokers (72.1%), and in smokers compared to HNS (85.5%). There was a numerically reduced effect of dexamethasone on IL-2 production that did not reach statistical significance. There was no difference in GRα and GRβ expression in follicular CD8 cells between COPD patients (50.9% and 30.4% respectively) and smokers (52.9% and 29.7% respectively). IFNγ production from COPD airway lymphocytes is corticosteroid insensitive. This phenomenon may be important in the poor clinical response often observed with corticosteroids.