Azithromycin is a macrolide antibiotic which inhibits bacterial protein synthesis, quorum-sensing and reduces the formation of biofilm. Accumulating effectively in cells, particularly phagocytes, it is delivered in high concentrations to sites of infection, as reflected in rapid plasma clearance and extensive tissue distribution. Azithromycin is indicated for respiratory, urogenital, dermal and other bacterial infections, and exerts immunomodulatory effects in chronic inflammatory disorders, including diffuse panbronchiolitis, post-transplant bronchiolitis and rosacea. Modulation of host responses facilitates its long-term therapeutic benefit in cystic fibrosis, non-cystic fibrosis bronchiectasis, exacerbations of chronic obstructive pulmonary disease (COPD) and non-eosinophilic asthma. Initial, stimulatory effects of azithromycin on immune and epithelial cells, involving interactions with phospholipids and Erk1/2, are followed by later modulation of transcription factors AP-1, NFκB, inflammatory cytokine and mucin release. Delayed inhibitory effects on cell function and high lysosomal accumulation accompany disruption of protein and intracellular lipid transport, regulation of surface receptor expression, of macrophage phenotype and autophagy. These later changes underlie many immunomodulatory effects of azithromycin, contributing to resolution of acute infections and reduction of exacerbations in chronic airway diseases. A sub-group of post-transplant bronchiolitis patients appears to be sensitive to azithromycin, as may be patients with severe sepsis. Other promising indications include chronic prostatitis and periodontitis, but weak activity in malaria is unlikely to prove crucial. Long-term administration of azithromycin must be balanced against the potential for increased bacterial resistance. Azithromycin has a very good record of safety, but recent reports indicate rare cases of cardiac torsades des pointes in patients at risk.