We assessed the clinical progress of 55 children 2 years after admission to hospital with acute bronchiolitis and performed lung function tests on 40. During the 2 year follow up period 75% of the children had wheezed, 36% had 2 or more lower respiratory symptoms lasting more than 2 weeks, 33% had more than 100 days of lower respiratory symptoms, and 13% were readmitted to hospital with acute respiratory disease. In addition 60% of the children were hyperinflated on lung function tests. Many of the children with hyperinflation at the 2 year assessment had not been hyperinflated 1 year earlier, suggesting variable airways obstruction. Reversibility of airways obstruction was also assessed by response to nebulised salbutamol. Nine children had a fall greater than 15% in airways resistance after salbutamol and these children had the highest baseline airways resistances. Airways resistance was higher in the children with a family history of atopy.