We studied the natural history of preschool respiratory symptoms in a population-based sample of children followed during the early school years. Current symptoms, ventilatory function, bronchial responsiveness to methacholine (BR), atopic status, and peak expiratory flow variability (PEFV) were assessed. Among those initially asymptomatic (210 subjects), 83.3% remained symptom-free, 6.7% started to wheeze, and 10% developed recurrent cough. Nearly half (46.9%) of the initial wheezing group (145 subjects) became symptom-free, 37.9% continued to wheeze, and 15.2% reported recurrent cough. Over half (56.0%) of the cough group (127 subjects) became symptom-free, 7.2% developed wheeze, and 36.8% reported continuing cough. Preschool wheezers showed the greatest BR (geometric mean 1.91 mg/ml) and the highest atopic prevalence (AP) (43.6%) when compared with the preschool asymptomatic group (BR: 3.39 mg/ml; AP: 23.8%) and the cough group (BR: 2.62 mg/ml; AP: 26.7%) (p = 0.0001 and p = 0.006 respectively). Children whose wheeze had persisted from the preschool period exhibited the poorest ventilatory function, the highest BR, a high AP, and high PEFV. The study shows that fewer than half of preschool wheezy children continued to wheeze in the early school years but those with persistent wheeze display many of the clinical characteristics consistent with a diagnosis of asthma.