This review examines our current understanding of the mechanisms underlying allergic diseases. The IgE molecule plays a central role in the pathogenesis of immediate hypersensitivity reactions by virtue of its capacity to bind specifically to high-affinity IgE receptors on mast cells and mediate the release of various mast cell-derived mediators and proinflammatory cytokines on exposure to allergen. Clinically significant allergic responses are followed by a late-phase response dominated by eosinophils and T lymphocytes. The majority of T cells in allergic responses are memory T cells secreting helper type 2 (TH2)-like cytokines, i.e., interleukin (IL)-4, IL-5, IL-13, but not interferon-gamma. These cytokines regulate IgE synthesis and promote eosinophil development, thus contributing to allergic inflammatory responses. Failure to control immune activation early in the course of allergic disease blunts responses to glucocorticoid therapy and contributes to disease progression. The identification of key cells and molecules involved in the initiation and maintenance of allergic inflammation is likely to become an important target in the treatment of this common group of illnesses.