Acute bronchiolitis and asthma are respiratory tract diseases of childhood that are characterized by wheezing. However, the diagnosis of asthma is difficult in patients younger than 2 years. We evaluated the association between asthma or acute bronchiolitis and various risk factors in young children. This perspective cohort study included a study group of children younger than 2 years with a recorded diagnosis of acute bronchiolitis (N = 4,586) as well as a control group (N = 4,263). Children in both groups were registered between January 1, 2004 and December 31, 2004, on the Taiwan Longitudinal Health Insurance Database (2005), and each child was followed in our study until December 31, 2006, using data from the same source. Of the 8,849 children in our study, 355 experienced asthma during the 3-year follow-up period. Among these 355 asthma patients, 332 children (29.1 per 1,000 person-years, 95% CI 26.2-36.4) belonged to the acute bronchiolitis cohort and 23 children (2.0 per 1,000 person-years, 95% CI 13.3-29.9) belonged to the comparison cohort. Cox proportional hazard regression analysis showed that children with acute bronchiolitis were more likely to have asthma than the control population, after adjustment for potential confounders (adjusted hazard ratio [HR] 13.55, 95% CI 8.87-20.71). Boys with acute bronchiolitis had a higher HR for asthma than girls during the 3-year follow-up. Children with acute bronchiolitis who lived in rural areas had a 1.49 HR for asthma compared with their urban counterparts. Children living in the northern region of Taiwan had a higher HR ratio than those in other regions. Sex, urbanization, and geographic region all showed significant associations with acute bronchiolitis and asthma. Based on the asthma-free survival curves of Kaplan-Meier analysis in our study, young children with acute bronchiolitis should be monitored for 2 years to prevent them from developing asthma. This was the first study to evaluate the length of time for which acute bronchiolitis poses a risk for the development of asthma in young children.