A cohort of 336 infants was followed from birth for a total of 717 child-years for development of atopy and occurrence of acute diarrhea. During follow-up 94 (28%) of the infants developed atopic eczema or gastrointestinal allergy associated with food allergens, or both. Infants with food allergy had significantly (p = 0.0074) more episodes of acute diarrhea than infants with no atopy, but there was no apparent temporal correlation between the occurrence of acute diarrhea and appearance of gastrointestinal allergy or atopic eczema. Serum IgE levels in children up to 2 years of age who had diarrhea and atopic eczema were lower than those in atopic eczema children with no diarrhea, but infants with gastrointestinal allergy who had acute diarrhea tended to have higher IgE levels than those without diarrhea. Breastfeeding over 6 months of age reduced the incidence of diarrhea in the first year of life in both atopic and nonatopic infants, but had no significant effect on the total incidence of diarrhea during the 2 year follow-up, as infants breast-fed longer had more diarrhea in the second year of life. Prolonged breast-feeding also reduced the severity of diarrhea in atopic infants aged 7–12 months but not for older infants.