The prevalence of asthma and wheezing illness in children has increased substantially over recent decades and places a large burden on health care resources. Despite increasing evidence that both 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. Several phenotypes of wheeze have been described and many risk factors identified for the development of asthma. A thorough knowledge of early life lung physiology will enable us to identify children at risk for developing persistent disease. The development of objective outcome measures that can be applied in early life will aid in distinguishing between children with transient early wheeze and those who will progress to persistent disease, enabling effective, targeted therapy.