Asthma is the most common chronic disease of childhood. Despite increasing evidence indicating that genetic and environmental factors have significant effects on airway development and function in early life, our understanding of the natural history of the disease is limited. The development of objective outcome measures will enable us to distinguish between children with transient early wheeze and those who will progress to persistent asthma, and to investigate factors affecting airway function throughout early childhood. A thorough knowledge of lung physiology in early life and its relationship with environmental exposures and prior or subsequent development of asthma would have a profound effect on our understanding of the natural history of asthma and the design of future strategies for disease prevention.