The aim of the present study was to determine the economic impact in the UK of wheezing disorders in preschool children. Health, societal and family-borne costs were calculated for a sample of 94 preschool children who attended hospital with a primary diagnosis of wheeze or asthma during 1998/1999. Sample costs were calculated using data from a structured interview schedule and from symptom diaries completed by trial parents, patients' general practice and hospital records, and hospital finance data. Health costs for 1-5-yr-olds in the UK were calculated using data from a postal population survey in the same region. It is estimated that 1-5-yr-old children with wheeze in the UK cost the health service a total of 53 million UK pounds (GBP). The greatest expenditure, 34 million GBP, was for primary care, representing 65.2% of total healthcare costs. Prescription costs represented 20.4% (11 million GBP) of total healthcare costs. Caring for preschool children with wheeze in the UK cost the health service 0.15% of its total budget in 1998/1999. The total costs to society of caring for the 0.88% of preschool children who attended hospital for asthma or wheeze in a year represented a further 2.6 million UK pounds. Primary prevention strategies at the population level promise more cost savings than any attempt at decreasing hospitalisations in those more severely ill.