Pollutants such as formaldehyde, benzene series compounds and total volatile organic compounds (TVOC) released by residential interior decoration activities (including household renovation and new furniture) pose a severe threat to children’s respiratory health. To study the effect of indoor decoration on children’s respiratory diseases and provide suggestions to prevent it, we conducted a cross-sectional questionnaire survey amongst 6547 preschoolers from 34 kindergartens in Chongqing, China, and selected 39 houses to measure their indoor air pollutants concentrations. The results showed that household decoration, during pregnancy and early childhood, would increase the risk of children’s rhinitis, asthma and pneumonia. Vacancy time after the completion of decoration, furniture pieces and decoration materials significantly affected the concentration of formaldehyde, xylene and TVOC, which could pose a potential risk to children’s respiratory health. The concentration of xylene and TVOC and the incidence of children’s asthma and pneumonia were both negatively correlated with the vacancy time. Decoration materials such as composite and ceramic tile/stone/cement flooring and water-based/latex/oil-based paints emit more gaseous pollutants than solid wood flooring and wallpaper, respectively, which were more likely to increase the risk of children’s respiratory diseases. Adequate ventilation and air purification can reduce the impact of home decoration.