Progranulin (PGRN) is an anti-inflammatory protein, yet its digestion by neutrophil-derived proteinases generates products that can stimulate epithelial cell lines to secrete the neutrophil chemoattractant interleukin (IL)-8. Because dysregulated neutrophilic inflammation is implicated in the pathophysiology of chronic obstructive pulmonary disease (COPD), the possible influence of PGRN and digestion products may be of relevance to understanding and treating inflammation in the disease. PGRN was measured in sputum sol-phase samples from patients with a clinical diagnosis of COPD and chronic sputum production in a clinically stable state; PGRN correlated negatively with bacterial load (colony-forming units/ml) (r = -0.446, P = 0.003, n = 43) and markers of neutrophilic inflammation, including neutrophil elastase (NE, nM) (r = -0.562, P = 0.008, n = 21) and proteinase-3 (PR3, nM) (r = -0.515, P = 0.017, n = 21). Products of PGRN digestion were detected in sputum sol phase, and PGRN conversion activity in sputum sol phase was inhibited with the serine proteinase inhibitor α1-antitrypsin. Digested PGRN at concentrations likely to be present in the airways did not stimulate IL-8 secretion from normal human bronchial epithelial (NHBE) cells. Infection of NHBE cells with live Haemophilus influenzae significantly increased PGRN secretion compared with untreated cells (P ≤ 0.001). The concentration of PGRN relates negatively to the amplified airway inflammation associated with bacterial colonization in clinically stable COPD. This relationship is driven by the proteolytic action of the neutrophil-derived proteinases NE and PR3; the products released by this action are unlikely to stimulate significant IL-8 secretion from epithelial cells in the airways.