No proven treatments exist for bronchiolitis obliterans syndrome (BOS) following lung transplantation. Inhaled liposomal cyclosporine (L-CsA) may prevent BOS progression. Methods: A 48-week phase IIb randomised clinical trial was conducted in 21 lung transplant patients with BOS assigned to either L-CsA with standard-of-care (SOC) oral immunosuppression (L-CsA group) or SOC (SOC-alone group). Efficacy end-points were BOS progression-free survival (defined as absence of ≥20% decline in forced expiratory volume in 1 s (FEV1) from randomisation, re-transplantation or death) and BOS grade change. Results: BOS progression-free survival was 82% for L-CsA versus 50% for SOC-alone (p=0.1) and BOS grade worsened in 18% for L-CsA versus 60% for SOC-alone (p=0.05). Mean changes in δFEV1 and forced vital capacity, respectively, stabilised with L-CsA: +0.005 (95% CI -0.004-+0.013) and -0.005 (95% CI -0.015-+0.006) L·month-1, but worsened with SOC-alone: -0.023 (95% CI -0.033--0.013) and -0.026 (95% CI -0.039--0.014) L·month-1 (p<0.0001 and p=0.009). Median survival (4.1 versus 2.9 years; p=0.03) and infection rate (45% versus 60%; p=0.7) improved with L-CsA versus SOC-alone; creatinine and tacrolimus levels were similar. Conclusions: L-CsA was well tolerated and stabilised lung function in lung transplant recipients affected by BOS without systemic toxicity, providing a basis for a global phase III trial using L-CsA.