Parents, pediatricians, social scientists, and policymakers have become increasingly concerned that infants and children in day care, especially those younger than 3 years of age, are at risk for morbidity associated with several types of acute illness. We have examined the empirical evidence on the impact of day-care attendance on frequency of respiratory illnesses, diarrhea, hepatitis A, meningitis, and cytomegalovirus disease in children, day-care staff, and household contacts. The short- and long-term costs of day-care-associated illnesses were assessed, wherever possible within a benefit-cost framework. Available evidence suggests that children in day care, and sometimes their teachers and household contacts, have higher rates of diarrhea, hepatitis A, meningitis, and possible otitis media than children not in day care. There is only weak or moderate evidence that children and their families are at risk for high rates of respiratory illness (other than otitis media) or cytomegalovirus infection. Taken together, the excess of these illnesses among children in day care may impose moderate net costs on families and on society. Revisions of state regulatory policy regarding health practices in day care and policy initiatives designed to provide parents with more information and authority are recommended to protect the health and development of children in day care.