Background Chronic obstructive pulmonary disease (COPD) is a progressive lung disease characterized by abnormal cellular responses to cigarette smoke, resulting in tissue destruction and airflow limitation. Autophagy is a degradative process involving lysosomal turnover of cellular components, though its role in human diseases remains unclear. Methodology and Principal Findings Increased autophagy was observed in lung tissue from COPD patients, as indicated by electron microscopic analysis, as well as by increased activation of autophagic proteins (microtubule-associated protein-1 light chain-3B, LC3B, Atg4, Atg5/12, Atg7). Cigarette smoke extract (CSE) is an established model for studying the effects of cigarette smoke exposure in vitro. In human pulmonary epithelial cells, exposure to CSE or histone deacetylase (HDAC) inhibitor rapidly induced autophagy. CSE decreased HDAC activity, resulting in increased binding of early growth response-1 (Egr-1) and E2F factors to the autophagy gene LC3B promoter, and increased LC3B expression. Knockdown of E2F-4 or Egr-1 inhibited CSE-induced LC3B expression. Knockdown of Egr-1 also inhibited the expression of Atg4B, a critical factor for LC3B conversion. Inhibition of autophagy by LC3B-knockdown protected epithelial cells from CSE-induced apoptosis. Egr-1 −/− mice, which displayed basal airspace enlargement, resisted cigarette-smoke induced autophagy, apoptosis, and emphysema. Conclusions We demonstrate a critical role for Egr-1 in promoting autophagy and apoptosis in response to cigarette smoke exposure in vitro and in vivo. The induction of autophagy at early stages of COPD progression suggests novel therapeutic targets for the treatment of cigarette smoke induced lung injury.