Asthma is a significant and increasing health problem. Airway inflammation and hyperresponsiveness are key pathophysiological mechanisms underlying asthma. Currently, effective treatments target these two processes and can lead to clinically important improvements in disease control. At present, decisions to initiate or modify therapy are based on symptoms and measures of airway caliber, with no direct assessment of airway inflammation or hyperresponsiveness. It is now possible to measure airway inflammation using noninvasive markers such as exhaled gases, induced sputum and serum measurements. Exhaled nitric oxide (eNO) and induced sputum eosinophils show the greatest promise as clinically useful markers of airway inflammation in asthma. Induced sputum can now be applied to the diagnosis of airway diseases, based on its ability to detect eosinophilic bronchitis in cough, and to differentiate between eosinophilic and non-eosinophilic asthma. The place of induced sputum and eNO in the ongoing monitoring of patients with asthma are now being investigated in controlled trials.