Patients with asthma and chronic obstructive pulmonary disease (COPD) are susceptible to exacerbations, often caused by microbial pathogens. We hypothesised that intracellular Toll-like receptor (TLR) function in blood mononuclear cells (PBMCs) from these subjects would be impaired and that this impairment is related to exacerbation frequency. PBMCs stimulated with a TLR-9 agonist (but not TLR-3 or 7/8) produced significantly less IFN-α in asthma (26 [3–696] pg/ml) compared to control (943 [164–1651]) and COPD (597 [127–1186]) subjects (p = 0.0019) but this was not related to the number of exacerbations per year in asthma or COPD. In COPD, IFN-α levels were related to KCO (% predicted) in COPD (r = -0.41, p = 0.01). IFN-α was derived from plasmacytoid dendritic cells (pDCs) and their frequency was lower in asthma compared to control subjects (Control 0.48% [0.33-0.64] vs asthma 0.29% [0.13-0.34], p = 0.019) whereas pDC function per se was not significantly impaired between groups. The mechanism underlying reduced IFN-α production and the clinical consequences in severe asthma remains to be established.