Corticosteroids are known to affect the number and function of circulating lymphocytes in humans. The effect of 2 years administration of inhaled budesonide (200 micrograms/day) on the number and function of B and T lymphocytes and T cell subsets was evaluated in 16 young children with severe asthma. The number of T and B cells and T suppressor/cytotoxic cells (CD8 T cell) and T helper/inducer cells (CD4 T cell) before therapy was found to be comparable to the number of cells observed in the healthy control group. Two years administration of inhaled budesonide did not significantly alter the percentage and absolute number of all these cells. The functional activity of T lymphocytes was evaluated by the "local xenogeneic graft versus host reaction" (GVHR). A positive (normal) GVHR was observed in only 5 of the 16 children (31%) in the budesonide group before therapy, compared to 15 of 16 children (94%) in the healthy control group. During the 2 years treatment with inhaled budesonide, the percentage of patients having positive GVHR increased from 31% before therapy to 69% and 77% after 1 and 2 years of therapy (P = 0.05 and 0.02), respectively. The data observed in this study indicate that 2 years administration of inhaled budesonide did not alter the number of B and T lymphocytes and T cell subsets. However, it was associated with improvement in the GVHR function of T cells.