Background: Wheezing and asthma often begins in early childhood, but it is difficult to predict whether or not a wheezy infant will develop asthma. Some researchers suggest that treatment with inhaled corticosteroids at the first signs of wheezing in childhood could prevent the development of asthma later in life. However, other investigators have reported that although such treatment could help control symptoms, the benefits can disappear within months of stopping treatment. We tested our hypothesis that to prevent loss of lung function and worsening asthma later in childhood, anti-inflammatory treatment needs to be started early in life. Methods: We did a randomised, double-blind, controlled study of inhaled fluticasone propionate 100 μg twice daily in young children who were followed prospectively and randomised after either one prolonged (>1 month) or two medically confirmed wheezy episodes. The dose of study drug was reduced every 3 months to the minimum needed. If the symptoms were not under control by 3 months, open-label fluticasone propionate 100 μg twice daily was added to the treatment. Children were followed-up to 5 years of age, at which point we gave their parents or guardians questionnaires, and measured the children's lung function (specific airways resistance [sR aw], forced expiratory volume in 1s [FEV 1]) and airway reactivity (eucapnic voluntary hyperventilation [EVH] challenge). This study is registered as an International Standard Randomised Controlled Trial, number ISRCTN86717853. Findings: We followed 1073 children prospectively, of whom 333 were eligible, and 200 of these began treatment (130 male, median age 1·2 years [range 0·5-4·9]; 101 placebo, 99 treatment); 173 (85 treatment, 88 placebo) completed the follow-up at age five years. The groups did not differ significantly in the proportion of children with current wheeze, physician-diagnosed asthma or use of asthma medication, lung function, or airway reactivity (percentage change in FEV 1, adjusted mean for placebo 5·5% [95% CI -2·5 to 13·4]) vs for treatment 5·0% [-2·2 to 12·2], p=0·87). There were no differences in the results after adjustment for open-label fluticasone propionate, nor between the two groups in the time before the open-label drug was added (estimated hazard ratio 1·12 [95% CI 0·73-1·73], p=0·60), or the proportion needing the open-label drug (43 [42·57%] placebo, 41 [41·41%] treatment). Interpretation: The early use of inhaled fluticasone propionate for wheezing in preschool children had no effect on the natural history of asthma or wheeze later in childhood, and did not prevent lung function decline or reduce airway reactivity. © 2006 Elsevier Ltd. All rights reserved.