BACKGROUND The non-specific bronchial hyper-responsiveness reported in mild to moderate COPD is usually attributed to reduced airway calibre accentuating the effect of airway smooth muscle shortening. We hypothesized that in more severe COPD the fall in forced expiratory volume in 1 second (FEV(1)) seen during methacholine challenge would result from an increase in residual volume and decrease in vital capacity rather than an increase in airways resistance. METHODS Twenty-five subjects with moderate to severe COPD and 10 asthmatic subjects had spirometry and oscillatory mechanics measured before methacholine challenge and at a 20% fall from baseline post challenge (PC(20)FEV(1)). RESULTS In the COPD subjects median PC(20) was 0.35mg/mL. Comparing baseline to PC(20) there were significant falls in forced vital capacity (FVC) (2.91 vs. 2.2L; p<0.001), slow vital capacity (3.22 vs. 2.58L; p<0.001) and IC (2.21 vs. 1.75L; p<0.001) without change in FEV(1)/FVC ratio (0.52 vs. 0.52; not significant) or in total lung capacity where this was measured. Total respiratory system resistance (R(5)) was unchanged (0.66 vs. 0.68; not significant) but total respiratory system reactance decreased significantly (-0.33 vs. -0.44; p<0.001). In contrast, the asthmatics became more obstructed and showed a proportionally smaller fall in lung volume with increase in R(5) (0.43 vs. 0.64; p<0.01). CONCLUSIONS In moderate to severe COPD the fall in FEV(1) with methacholine is mainly due to increases in residual volume, which may represent airway closure and new-onset expiratory flow limitation.