BACKGROUND: Exposure to pets in childhood has been associated with a reduced risk of wheezing and atopy. OBJECTIVE: Our objective was to determine whether the effects of pet exposure on immune development and atopy in early childhood can be explained by alterations in exposure to innate immune stimuli in settled dust. METHODS: Two hundred and seventy-five children at increased risk of developing allergic diseases were evaluated to age 3 years for pet ownership, blood cell cytokine responses, and atopy. Can f 1, Fel d 1, endotoxin, ergosterol, and muramic acid were measured in settled dust from 101 homes. RESULTS: Dog exposure at birth was associated with decreased atopic dermatitis (AD) (12% vs. 27%; P=0.004) and wheezing (19% vs. 36%; P=0.005) in year 3. The rates of AD (23%) and wheezing (42%) in year 3 were relatively high in children who acquired dogs after birth. The prevalence of dog sensitization (10-12%) did not vary according to dog exposure. Can f 1 levels in bedroom dust were positively associated with IL-10 (r=0.26; P=0.01), IL-5 (r=0.34, P<0.001), and IL-13 (r=0.28; P=0.004) responses at age 1, and IL-5 (r=0.24; P=0.022) and IL-13 (r=0.25; P=0.015) responses at age 3. In contrast, endotoxin was associated with IFN-gamma (r=0.31; P=0.002) and IL-13 (r=0.27; P=0.01) responses at age 3 but not at age 1, and similar relationships were present for muramic acid. Adjustment for levels of innate immune stimuli in house dust did not significantly affect the relationships between Can f 1 and cytokine responses. CONCLUSIONS: Exposure to dogs in infancy, and especially around the time of birth, is associated with changes in immune development and reductions in wheezing and atopy. These findings are not explained by exposure to endotoxin, ergosterol, or muramic acid.