Upper respiratory tract infection (URTI) is a common cause of deterioration of asthma in children. We investigated if inhaled steroids (budesonide), started early after URTI, could reduce asthma. Thirty-one children, 3-10 years of age, with deterioration during URTI participated. The study design was double-blind, crossover and placebo-controlled. Peak-expiratory flow (PEF) and symptom scores were recorded. Four treatment periods of 9 days, two with budesonide and two with placebo, were planned. Treatment was started at the first sign of URTI. Budesonide/placebo was given by Turbuhaler at 0.2 mg qid for 3 days, tid for 3 and bid for the last 3 days. Twenty-two children completed 67 periods. Eleven visited the emergency room, only three during budesonide therapy. Five received oral steroids and two where admitted to hospital, all receiving placebo. Symptom scores were not significantly lower during budesonide treatment. PEF, both morning and evening, was significantly higher during budesonide than placebo (p = 0.015 and p = 0.022). Inhaled budesonide can attenuate exacerbation of URTI-induced asthma.