Objective: To prospectively investigate the association of high levels of immunoglobulin E (IgE) sensitization to foods and the presence of atopic dermatitis (judged by reported topical steroid use during the first 16 months of life) in a birth cohort of 620 Australian children “at risk” of allergic disease because of family history. Results: A total of 559 of the children in the cohort were fully evaluated, and the cumulative prevalence of atopic dermatitis was 24%. More children in the cohort who had atopic dermatitis had strongly positive skin test results (≥4+, histamine equivalent units, ≥~6-mm wheal), consistent with IgE food sensitization to either cow’s milk, egg, or peanut at 6 months (22% vs 5%, χ² = 35; P < 10^–6) and at 12 months (36% vs 11%, χ² = 41; P < 10^–6) than those without atopic dermatitis. The calculated attributable risk percent for IgE food sensitization as a cause of atopic dermatitis was 65% and 64% at these times. In a separate group of infants with severe atopic dermatitis, the equivalent rates of IgE food sensitization at 6 months was 83% and at 12 months, 65%. Conclusion: IgE food sensitization is a major risk factor for the presence of atopic dermatitis in infancy. (J Pediatr 2000;137:475-9)