•  The novel signalling molecule hydrogen sulphide (H2S) regulates diverse cell physiological processes in several organs and systems including airway smooth muscle contractility. •  We explored the mechanisms of H2S‐induced smooth muscle relaxation in small intrapulmonary airways using lung slices and imaging approaches. •  We found that exogenous and endogenous H2S inhibited intracellular Ca2+ release specifically through the inositol‐1,4,5‐trisphosphate (InsP3) receptor in smooth muscle cells and reversibly inhibited acetylcholine‐induced intracellular Ca2+ oscillations, thus leading to airway dilatation. •  The effects of H2S on InsP3‐induced Ca2+ release and airway contraction were mimicked by the reducing agent dithiothreitol and inhibited by the oxidizing agent diamide, suggesting that H2S acts as a thiol‐reducing agent to reduce Ca2+ release through InsP3 receptors and to evoke relaxation. •  Our results suggest that endogenously produced H2S is a novel modulator of InsP3‐mediated Ca2+ signalling in airway smooth muscle and thus promotes bronchodilatation. Abstract  Hydrogen sulphide (H2S) is a signalling molecule that appears to regulate diverse cell physiological process in several organs and systems including vascular and airway smooth muscle cell (SMC) contraction. Decreases in endogenous H2S synthesis have been associated with the development of cardiovascular diseases and asthma. Here we investigated the mechanism of airway SMC relaxation induced by H2S in small intrapulmonary airways using mouse lung slices and confocal and phase‐contrast video microscopy. Exogenous H2S donor Na2S (100 μm) reversibly inhibited Ca2+ release and airway contraction evoked by inositol‐1,4,5‐trisphosphate (InsP3) uncaging in airway SMCs. Similarly, InsP3‐evoked Ca2+ release and contraction was inhibited by endogenous H2S precursor l‐cysteine (10 mm) but not by l‐serine (10 mm) or either amino acid in the presence of dl‐propargylglycine (PPG). Consistent with the inhibition of Ca2+ release through InsP3 receptors (InsP3Rs), Na2S reversibly inhibited acetylcholine (ACh)‐induced Ca2+ oscillations in airway SMCs. In addition, Na2S, the H2S donor GYY‐4137, and l‐cysteine caused relaxation of airways pre‐contracted with either ACh or 5‐hydroxytryptamine (5‐HT). Na2S‐induced airway relaxation was resistant to a guanylyl cyclase inhibitor (ODQ) and a protein kinase G inhibitor (Rp‐8‐pCPT‐cGMPS). The effects of H2S on InsP3‐evoked Ca2+ release and contraction as well as on the relaxation of agonist‐contracted airways were mimicked by the thiol‐reducing agent dithiothreitol (DTT, 10 mm) and inhibited by the oxidizing agent diamide (30 μm). These studies indicate that H2S causes airway SMC relaxation by inhibiting Ca2+ release through InsP3Rs and consequent reduction of agonist‐induced Ca2+ oscillations in SMCs. The results suggest a novel role for endogenously produced H2S that involves the modulation of InsP3‐evoked Ca2+ release – a cell‐signalling system of critical importance for many physiological and pathophysiological processes.