Forkhead box class O 3a (FOXO3) is a member of the FoxO transcription factor subfamily, which regulates the expression of target genes not only through DNA binding as a transcription factor, but also through protein-protein interaction. Although FoxO3 is a well-known transcription factor involved in diverse biological processes, the role of FoxO3 in cigarette smoke (CS)-induced lung inflammation and injury has not been studied. It is, therefore, hypothesized that deficiency of FoxO3 leads to increased susceptibility to CS-induced lung inflammatory response and airspace enlargement. In this article, we show that the levels of FOXO3 are significantly decreased in lungs of smokers and patients with chronic obstructive pulmonary disease, as well as in lungs of mice exposed to CS. Genetic ablation of FoxO3 led to pulmonary emphysema and exaggerated inflammatory response in lungs of mice exposed to CS. We further showed that CS induced the translocation of FoxO3 into the nucleus where FoxO3 interacted with NF-κB and disrupted NF-κB DNA-binding ability, leading to inhibition of its activity. Targeted disruption of FoxO3 also resulted in downregulation of antioxidant genes in mouse lungs in response to CS exposure. These results suggest that FoxO3 plays a pivotal role in regulation of lung inflammatory response and antioxidant genes, and deficiency of FoxO3 results in development of chronic obstructive pulmonary disease/emphysema.