Inhaled insulin has attractive pharmacodynamic properties with a fast onset of action which should lead to improved postprandial blood glucose concentrations. Comparisons with regular subcutaneous (sc) insulin in clinical studies, however, showed lower fasting blood glucose concentrations. Overall, clinical efficacy of inhaled insulin was comparable to that of regular sc insulin. Treatment with inhaled insulin was safe and well tolerated, with slight and reversible changes in lung function parameters and a rise in insulin antibodies (not associated with any clinical or safety parameters) as main adverse effects. Treatment satisfaction in open-label studies was higher with inhaled than with sc insulin, indicating that inhaled insulin might help to overcome one of the major hurdles of diabetes therapy, i.e. a timely initiation of insulin therapy. The first inhaled insulin formulation was approved in the US and Europe in January 2006, but some countries granted reimbursement only for selected patients, or did not reimburse treatment with inhaled insulin at all because of the high treatment costs. These are due to the rather low bioavailability of approximately 8-15%. Therefore, further research is needed to improve the bioavailability of inhaled insulin: e.g. through optimization of the inhaler, the insulin formulation, or the inhalation technique. In view of the potential for further improvement, inhaled insulin may become a very attractive alternative to sc insulin, in particular in patients in whom insulin therapy has to be initiated and/or intensified.