Background The immunological processes in early life and their relation to allergic sensitization leading to a Th2 cytokine profile are still not well understood. Objective To analyse the environmental and genetic risk factors and immunological responses at birth in relation to the development of atopic disease at 12 months of age in a longitudinal study of high-risk children. Methods High-risk children were followed from birth till 12 months of age. Mononuclear cells obtained at birth and 6 and 12 months thereafter were analysed for their proliferative and cytokine responses after polyclonal and allergen-specific stimulation. Results At 12 months of age 25 percent children had developed an atopic disease. Two atopic parents, parental smoking and atopic dermatitis of at least one of the parents were significant risk factors. In cord blood of newborns who developed atopy, an increased percentage of CD4 CD45RO cells and an increased polyclonal-stimulated proliferation were observed. Furthermore, an impaired allergen-induced, but not polyclonal-stimulated IFN- production was found, suggesting a regulatory defect. At 6 and 12 months of age, a strong Th2 profile (characterized by increased levels of IL-4, IL-5, and IL-13) after both polyclonal and, to a lesser extent, allergen-specific stimulation was found in the children developing atopy. Allergen-induced IL-10 production at 12 months of age was only observed in the non-atopic children. Conclusion Our data indicate that the first 6 months of life represent a critical time window for the initiation of immunological changes resulting in the development of atopy. The selective development of a Th2 cytokine profile in high-risk children who develop atopy is due to increased production of Th2 cytokines, possibly caused by impaired allergen-induced IFN- production in the neonatal period. Furthermore, the decreased allergen-induced IL-10 levels observed in the atopic children at 12 months of age may result in a lack of down-regulation of the inflammatory process.