Effect of daily oral prednisolone treatment was studied in 29 patients with pulmonary sarcoidosis. Twenty normal control subjects were also studied. Pretreatment absolute lymphocyte counts and proportion of lymphocytes in peripheral blood were significantly lower in patients with sarcoidosis as compared to normal controls. Total cell count and the proportion of lymphocytes in bronchoalveolar lavage (BAL) fluid were significantly higher in sarcoidosis. The proportion of CD3+ and CD4+ was significantly lower in peripheral blood and higher in BAL fluid in patients with sarcoidosis. Immunoglobulins (IgG, A and M) and complements (C3, C4 and CH50) were significantly higher both in peripheral blood and BAL fluid. Patients with sarcoidosis were treated with daily oral prednisolone (30 mg/day). Repeat studies were performed after an interval of 4-6 months in 20 patients with sarcoidosis. A significant increase in absolute lymphocyte counts in peripheral blood and decrease in the proportion of lymphocytes in BAL fluid occurred with prednisolone treatment. Proportion of CD3+, CD4+ and B cells increased in peripheral blood and decreased in BAL fluid. Complement and immunoglobulin levels revealed a significant reduction in peripheral blood and BAL fluid. It is concluded that patients with sarcoidosis have peripheral blood lymphopaenia and lymphocytic alveolitis. They have increased levels of complement and immunoglobulins both in the peripheral blood and BAL fluid. All these abnormalities show significant improvement with prednisolone treatment.