In population studies, most children with episodic viral wheeze (EVW) become symptom free by 6 years. We studied the outcome of children with severe EVW, treated and followed up in hospital. We followed up 78 children <4 years, managed by paediatricians for severe EVW, to the age of 5-10 years. We recorded respiratory symptoms, spirometry and exhaled nitric oxide (FeNO). At follow-up, 42 children (54%) had current wheeze or dyspnoea, and 52 (67%) had current asthma. There was no significant difference between children with and without current asthma in FEV1 (p = 0.420), but FeNO was higher in children with current asthma (median (interquartile range) 14.5 (11.25-21.50) ppb) than in those without (12.0 (10.0-13.8) ppb, p = 0.020). Positive family history of asthma was the only factor associated with current asthma (odds ratio 8.77, 95% CI 2.88-26.69, p < 0.001). This remained significant after adjustment for duration of follow-up, gender and parental smoking. Conclusion. Severe EVW at preschool age has a high risk of asthma at age 5-10 years, and this is reinforced by a positive family history of asthma and to elevated FeNO levels.