Allergic diseases and asthma are caused by dysregulated Th2-biased immune responses to environmental allergens in genetically predisposed individuals. Over the past several years there has been much progress in understanding the mechanisms by which Th2 responses are generated and the pathogenic role of natural killer T cells in asthma. In addition, there has been much progress in understanding the mechanisms of tolerance to allergens, the role of natural and adaptive allergen-specific regulatory T cells, and the strategies to prevent or to reverse allergic disease and asthma. Impaired expansion of regulatory T cells is hypothesized to lead to the development of allergy and asthma, and treatment to induce allergen-specific regulatory T cells could provide curative therapies for these problems.