This study aimed to investigate the influence of maternal allergy on cord blood regulatory and effector T cells and to evaluate their role as a predictor of atopic dermatitis (AD) during the first 2yr of life. Seventy mother-infant pairs were recruited in this prospective birth cohort study (21 allergic and 49 non-allergic mothers). Cord blood samples were collected and assayed for the percentage of regulatory T cells (Treg), interferon-γ (IFN-γ), and interleukin-4 (IL-4) producing T cells (Th1 and Th2, respectively) using flow cytometry. Experiments were undertaken to assess the function of cord blood CD4(+) CD25(+) CD127(-) Treg cells by cell proliferation and cytokine responses. Their offspring at the age of 2yr old were evaluated by dermatologists to determine whether they had AD. During the first 2yr of life, 15.7% of the children developed a physician-diagnosed AD. A significantly increased percentage of Th2 cell was observed in cord blood of newborns with maternal allergy. Treg/Th2 ratio significantly decreased among the offspring of allergic mothers. Treg cell-associated suppression of Th2 response was attenuated in Der p1-stimulated CD4(+) CD25(-) T cells from the offspring of allergic mothers. Children with reduced Th1/Th2 (p=0.001, OR=0.37) and Treg/Th2 (p=0.001, OR=0.47) ratio in cord blood had a higher risk of developing AD. Maternal allergic status is associated with increased percentage of IL-4(+) CD4(+) T cells and a reduced Treg/Th2 ratio in cord blood at their children's birth, which may predispose to an increased risk for developing AD.