Atopic dermatitis (AD) is considered to be one of the first manifestations in the atopic march. However, few prospective studies on AD and its association with childhood asthma exist.The aim of this study was to prospectively investigate the natural course of AD to determine factors influencing its prognosis and to analyze the relationship of AD with childhood asthma.The Multicenter Allergy Study, a German birth cohort, followed 1314 children from birth to age 7 years. Physical examinations, parental interviews on atopic symptoms and diagnoses, and determination of specific IgE levels were performed regularly.The cumulative prevalence of AD in the first 2 years of life was 21.5%. Of these children with early AD, 43.2% were in complete remission by age 3 years, 38.3% had an intermittent pattern of disease, and 18.7% had symptoms of AD every year. Severity (adjusted cumulative odds ratio, 5.86; 95% CI, 3.04-11.29) and atopic sensitization (adjusted cumulative odds ratio, 2.76; 95% CI, 1.29-5.91) were major determinants of prognosis. Early wheeze and a specific sensitization pattern were significant predictors for wheezing at school age, irrespective of AD. Early AD without these cofactors constituted no increased risk of subsequent wheeze (adjusted odds ratio, 1.11; 95% CI, 0.56-2.20) or bronchial hyperreactivity.AD is a common condition in infancy but disappears around age 3 years in a significant proportion of children. The prognosis is mostly determined by the severity and the presence of atopic sensitization. Early AD is associated with asthma at school age, but in many of these asthmatic children, wheezing manifests before or with the onset of AD. Children with AD and wheeze have a marked loss in lung function, suggesting a distinct phenotype rather than a progressive development from AD to asthma.