Cigarette smoke is the major cause of chronic obstructive pulmonary disease (COPD), a chronic inflammatory disease of the airway. The increased expression of inflammatory proteins results from enhanced gene transcription, as these mediators are induced in a cell‐specific manner. Changes in transcription depend on chromatin remodeling and the relative activities of histone acetyl‐transferases (HATs) and histone deacetylases (HDACs). We have shown that cigarette smoke reduces the expression of HDAC2 expression and HDAC activity in biopsies and alveolar macrophages. Cigarette smoke also enhanced IL‐1β–induced expression of tumor necrosis factor α (TNF‐α) by alveolar macrophages. TNF‐α release was enhanced by the HDAC inhibitor Trichostatin A and correlated significantly with HDAC activity. In addition, we show that glucocorticoid‐responsiveness is reduced in these cells and correlates with HDAC activity. Using a macrophage cell line, we show that hydrogen peroxide mimics cigarette smoke effects on HDAC activity and markedly attenuates dexamethasone inhibition of cytokine release. These results offer the first evidence for a suppressive effect of cigarette smoke on histone acetylation status. Reduced HDAC expression may account for the enhanced expression of inflammatory mediators such as GM‐CSF, IL‐8 and TNF‐α by cigarette smoke seen in lavage samples of smokers and patients with COPD. In addition, this mechanism may account for the reduced effectiveness of glucocorticoids in COPD.