Pulmonary surfactant is necessary to keep the terminal conducting airways patent. It is unknown if mild to moderate airway inflammation may influence surfactant function and thus contribute to the pathogenesis of chronic airway inflammation in children. To answer this question, 21 children with chronic obstructive bronchitis and 19 asymptomatic children with long-term tracheostomy and increased numbers of neutrophils in their airways were compared to 15 healthy controls. Bronchoalveolar lavage fluid was separated into large surfactant aggregates (LA) and a supernatant containing inhibitory constituents. Surfactant function of LA, recombinations of LA and supernatant and of a defined bovine surfactant and supernatant was assessed in a capillary surfactometer. Compared to controls, the function of the LA surfactant was reduced and there was no difference between children with tracheostomy and chronic obstructive bronchitis. The function of LA/supernatant recombinations was poor in all subjects. This may be explained by the well-known protein influx during the lavage procedure. The activity of bovine surfactant/supernatant reconstitutions was impaired in children with tracheostomy. In all surfactant mixtures assessed, surfactant function was inversely correlated to the number of neutrophils in the lavage fluid. Chronic lower airway inflammation with mild or no clinical symptoms is associated with impaired surfactant function. The dysfunction may contribute to airflow restrictions frequently observed in these children.