Induced sputum analysis has recently emerged as a potential new clinical tool in the diagnosis and management of obstructive airway diseases such as asthma, chronic obstructive pulmonary disease, and other disorders including bronchiectasis. Its safety has been demonstrated in numerous studies, and its efficacy is superior to previous techniques for determining airway inflammation. It is a noninvasive and highly reproducible approach in generating a measurable index of inflammatory cells in the airways of the lungs. Recent studies have shown that exacerbations, particularly in patients with moderate to severe asthma, can be reduced by routine analysis of induced sputum samples. We now have the ability to clinically apply sputum measurements to manage asthmatics. Inflammatory markers and cell types in induced sputum can also be investigated using newer technologies with more sensitive qualitative and quantitative features than basic cellular analysis. This review outlines the procedure for sputum induction, characterizes inflammatory cell types in the sputum, and addresses recent advances in the field of sputum analysis.