Lung function in chronic obstructive pulmonary disease (COPD) can be improved acutely by oral corticosteroids and bronchodilators. Whether clinical improvement can be maintained by subsequent inhaled therapy is unknown. COPD patients (n=1,022, mean prebronchodilator forced expiratory volume in one second (FEV1) 36% predicted) initially received formoterol (9 microg b.i.d.) and oral prednisolone (30 mg o.d.) for 2 weeks. After this time, patients were randomised to b.i.d. inhaled budesonide/formoterol 320/9 microg, budesonide 400 microg, formoterol 9 microg or placebo for 12 months. Postmedication FEV1 improved by 0.21 L and health-related quality of life using the St George's Respiratory Questionnaire (SGRQ) by 4.5 units after run-in. Fewer patients receiving budesonide/formoterol withdrew from the study than those receiving budesonide, formoterol or placebo. Budesonide/formoterol patients had a prolonged time to first exacerbation (254 versus 96 days) and maintained higher FEV1 (99% versus 87% of baseline), both primary variables versus placebo. They had fewer exacerbations (1.38 versus 1.80 exacerbations per patient per year), had higher prebronchodilator peak expiratory flow, and showed clinically relevant improvements in SGRQ versus placebo (-7.5 units). Budesonide/formoterol was more effective than either monocomponent in both primary variables. Budesonide/formoterol in a single inhaler (Symbicort) maintains the benefit of treatment optimisation, stabilising lung function and delaying exacerbations more effectively than either component drug alone or placebo.