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Objective: To determine if anti-inflammatory treatment for asthma reduces the risk of asthma hospitalization., Design: Retrospective cohort study., Setting: A health maintenance organization (HMO) in eastern Massachusetts., Participants: Members of the HMO who were identified during the period October 1991 through September 1994 as having a diagnosis of asthma using a computerized medical record system., Main Outcome: Hospitalization for asthma., Results: Of the 16941 eligible persons, 742 (4.4%) were hospitalized for asthma. The overall relative risk (RR) of hospitalization among those who received inhaled steroids was 0.5 (95% confidence interval [CI], 0.4-0.6) after adjustment for beta-agonist dispensing. Additional adjustment for age, race, other asthma medications, and amount and type of ambulatory care for asthma did not substantially affect the inverse relationship between use of inhaled steroids and hospitalization. Cromolyn was similarly associated with reduced risk, especially among children (RR,0.8; 95% CI, 0.7-0.9). In contrast, increasing beta-agonist use was associated with increasing hospitalization risk even after adjustment for other factors and medications. The steroid-associated protection was most marked among individuals who received the largest amount of beta-agonist., Conclusions: Inhaled steroids and, to a lesser extent, cromolyn confer significant protection against exacerbations of asthma leading to hospitalization. These results support the use of inhaled steroids by individuals who require more than occasional beta-agonist use to control asthma symptoms.