The effect of environmental tobacco smoke (ETS) on respiratory health was investigated among 7- to 12-yr-old children with asthmatic (n = 74) or cough (n = 95) symptoms. For 3 mo the children measured their peak expiratory flow rate (PEFR) every morning and evening, and kept a daily diary of respiratory symptoms. They also noted daily whether they had used respiratory medication and whether someone had smoked inside their home. Eleven percent of the asthmatic children and 14% of the children with cough had exposure to ETS at home during the study. In multiple regression and analyses controlling for potential confounders, any exposure to ETS during the study was associated with a reduction of 42 L/min (95% confidence interval [CI]: 10 to 74 L/min) in morning and 41 L/min (95% CI: 8 to 74 L/min) in evening PEFR among asthmatic children. Among these children, a dose-dependent increase in the effect of ETS was also seen. Daily variation in ETS exposure was only weakly (-9.2 L/min; 95% CI: 2.9 to 21.2 L/min) associated with PEFR, but the previous day's ETS exposure was a risk factor for bronchodilator use (relative risk [RR]: 10.3; 95% CI: 1.3 to 83.7), as well as for cough (RR: 12.4; 95% CI: 2.4 to 63.3) and phlegm production (RR: 7. 8; 95% CI: 1.4 to 41.7), on any given day. Among children with cough only, there was only a weak suggestion of any possible ETS effect. In conclusion, we found that exposure to ETS was associated with a decline in peak flow and increases in respiratory symptoms and use of bronchodilator drugs among asthmatic children.