Exposure to airborne endotoxin in infancy may protect against asthma by promoting enhanced T(H)1 response and tolerance to allergens. On the other hand, later in life, it adversely affects patients with asthma. Endotoxin binding to receptors on macrophages and other cells generates IL-12, which inhibits IgE responses. It also generates cytokines like IL-1, TNF-alpha, and IL-8, which cause inflammation. These signal transduction pathways resemble those leading to the generation of cytokines, such as IL-4, IL-13, and IL-5, which are responsible for the inflammation of IgE-mediated allergic disease. The main difference seems to be that endotoxin recruits neutrophils, but IgE recruits eosinophils, and the details of the tissue injury from these granulocytes differ. Sources of airborne endotoxin include many agricultural dusts, aerosols from contaminated water in many industrial plants, contaminated heating and air-conditioning systems, mist-generating humidifiers, and damp or water-damaged homes. Acute inhalation of high concentrations of endotoxin can cause fever, cough, and dyspnea. Chronic inhalation of lesser amounts causes chronic bronchitis and emphysema and is associated with airway hyperresponsiveness. Airborne endotoxin adversely affects patients with asthma in 3 ways: (1) by increasing the severity of the airway inflammation; (2) by increasing the susceptibility to rhinovirus-induced colds; and (3) by causing chronic bronchitis and emphysema with development of irreversible airway obstruction after chronic exposure of adults. The most effective management is mitigating exposure. The potential of drug treatments requires further clinical investigation.