Abstract Nitrogen dioxide (NO2), a surrogate measure of traffic-related air pollution (TRAP), has been associated with incident childhood asthma. Timing of exposure and atopic status may be important effect modifiers. We collected cross-sectional data on asthma outcomes from Toronto school children aged 5–9years in 2006. Lifetime home, school and daycare addresses were obtained to derive birth and cumulative NO2 exposures for a nested case–control subset of 1497 children. Presence of other allergic disease (a proxy for atopy) was defined as self-report of one or more of doctor-diagnosed rhinitis, eczema, or food allergy. Generalized estimating equations were used to adjust for potential confounders, and examine hypothesized effect modifiers while accounting for clustering by school. In children with other allergic disease, birth, cumulative and 2006 NO2 were associated with lifetime asthma (OR 1.46, 95% CI 1.08–1.98; 1.37, 95% CI 1.00–1.86; and 1.60, 95% CI 1.09–2.36 respectively per interquartile range increase) and wheeze (OR 1.44, 95% CI 1.10–1.89; 1.31, 95% CI 1.02–1.67; and 1.60, 95% CI 1.16–2.21). No or weaker effects were seen in those without allergic disease, and effect modification was amplified when a more restrictive algorithm was used to define other allergic disease (at least 2 of doctor diagnosed allergic rhinitis, eczema or food allergy). The effects of modest NO2 levels on childhood asthma were modified by the presence of other allergic disease, suggesting a probable role for allergic sensitization in the pathogenesis of TRAP initiated asthma.