The growth and maturity of the peripheral immune system and subsequent development of pulmonary immunity in early life is dictated by host, environmental and microbial factors. Dysregulation during the critical window of immune development in the postnatal years results in disease which impacts on lifelong lung health. Asthma is a common disease in childhood and is often preceded by wheezing illnesses during the preschool years. However, the mechanisms underlying development of wheeze and how and why only some children progress to asthma is unknown. Human studies to date have generally focused on peripheral immune development, with little assessment of local tissue pathology in young children. Moreover, mechanisms underlying the interactions between inflammation and tissue repair at mucosal surfaces in early life remain unknown. Disappointingly, mechanistic studies in mice have predominantly used adult models. This review will consider the aspects of the neonatal immune system which might contribute to the development of early life wheezing disorders and asthma, and discuss the external environmental factors which may influence this process.