This study was done to determine the effects and outcome of inhaled budesonide in addition to standard management of asthma exacerbations in pediatric age groups. A randomized, double-blind, placebo controlled trial was done in a tertiary care urban hospital. Sixty six children aged 5 to 15 years with moderate to severe asthma exacerbations were eligible. All patients received a single dose of prednisolone 1mg/kg orally as first dose of systemic corticosteroids and then salbutamol (0.15mg/kg) and ipratropium bromide (500mcg) was nebulized every 20 minutes for 3 doses and then hourly for 2 hours as a part of standard treatment of asthma exacerbations. The intervention was 2mg (4mL) of budesonide or 4mL of normal saline which was nebulized immediately after the 1st dose of nebulized salbutamol and ipratropium bromide. The baseline characteristics of the budesonide group (n=33) and placebo group (n=33) were similar, but at 1 hour, 2 hour and 3 hour PEFR, respiratory rate, pulse rate, SaO2 and asthma score were significantly improved in the budesonide group compared to placebo group (p<0.01). The positive immediate effect of nebulized budesonide added to standard treatment of asthma exacerbations is an encouraging finding for further investigations of its routine use in the treatment of asthma exacerbations in children.