We investigated the effect of in utero and postnatal environmental tobacco smoke (ETS) exposure on respiratory symptoms and atopy in the first 3 years of life in children at high risk of allergic disease (both parents atopic). Three hundred and sixty-nine children were followed from birth and reviewed at ages 1 and 3 years (respiratory questionnaire, skin testing). Parental smoking questionnaires were administered, and plasma cotinine in cord and peripheral blood (at age 1 year) was measured (capillary column gas-liquid chromatography). Wheezing starting in the first year of life was significantly more common in children of smoking mothers (54.2% vs. 39.5%, P = 0.017), but not wheezing starting after age 1 year (10.8% vs. 10.9%, smoking and nonsmoking mothers, P = 0.99). Detectable cord cotinine was not associated with wheeze. More frequent wheeze in infancy was significantly more common in those with detectable 1-year cotinine (e.g., wheeze without colds, 17.8% vs. 5.6%, P = 0.02; wheeze most days, 6.5% vs. 0%, P = 0.04). ETS exposure was not associated with atopy. In the multivariate regression analysis, maternal smoking during pregnancy and/or in the first year of life remained associated with wheeze in the first year of life (odds ratio, 1.88; 95% confidence interval, 1.14-3.12; P = 0.01). ETS exposure in "high-risk" infants increases the risk of wheezing starting in the first year of life, but not after age 1 year. However, ETS exposure has little or no effect on the development of atopy. Measurement of plasma cotinine was no more useful than tobacco exposure assessment by questionnaire in our cohort.