The primary function of the bronchial epithelium is to act as a defensive barrier aiding the maintenance of normal airway function. Bronchial epithelial cells (BEC) form the interface between the external environment and the internal milieu, making it a major target of inhaled insults. However, BEC can also serve as effectors to initiate and orchestrate immune and inflammatory responses by releasing chemokines and cytokines, which recruit and activate inflammatory cells. They also produce excess reactive oxygen species as a result of an oxidant/antioxidant imbalance that contributes to chronic pulmonary inflammation and lung tissue damage. Accumulated mucus from hyperplastic BEC obstructs the lumen of small airways, whereas impaired cell repair, squamous metaplasia and increased extracellular matrix deposition underlying the epithelium is associated with airway remodelling particularly fibrosis and thickening of the airway wall. These alterations in small airway structure lead to airflow limitation, which is critical in the clinical diagnosis of chronic obstructive pulmonary disease (COPD). In this review, we discuss the abnormal function of BEC within a disturbed immune homeostatic environment consisting of ongoing inflammation, oxidative stress and small airway obstruction. We provide an overview of recent insights into the function of the bronchial epithelium in the pathogenesis of COPD and how this may provide novel therapeutic approaches for a number of chronic lung diseases.