Eczema is very common and increasing in prevalence. Prospective studies investigating environmental and genetic risk factors for eczema in a birth cohort are lacking. We evaluated risk factors that may promote development of childhood eczema in the Cincinnati Childhood Allergy and Air Pollution Study (CCAAPS) birth cohort (n762) of infants with at least one atopic parent. Objective environmental exposure data were available for each participant. At annual physical examinations, children underwent skin prick tests (SPTs), eczema was diagnosed by a clinician, and DNA was collected. Among Caucasian children, 39% developed eczema by age 3. Children with a pet dog were significantly less likely to have eczema at age one (odds ratio (OR)0.62, 95% confidence interval (CI): 0.40-0.97) or at both ages 2 and 3 (OR0.54, 95% CI: 0.30-0.97). This finding was most significant among children carrying the CD14-159C/T CC genotype. Carriers of the CD14-159C/T and IL4Rα I75V single-nucleotide polymorphisms (SNPs) had an increased risk of eczema at both ages 2 and 3 (OR3.44, 95% CI: 1.56-7.57), especially among children who were SPT. These results provide new insights into the pathogenesis of eczema in high-risk children and support a protective role for early exposure to dog, especially among those carrying the CD14-159C/T SNP. The results also demonstrate a susceptibility effect of the combination of CD14 and IL4Rα SNPs with eczema.