Well-established evidence links endotoxin exposure, especially in the workplace, to airways disease. Endotoxin can increase disease severity by acting as a natural adjuvant to augment asthma and atopic inflammation. Recent studies suggest that it can even act on its own, causing a distinct endotoxic form of asthma. Other studies, however, contradict the paradigm that endotoxin's influence is solely a negative one. Epidemiologic associations of environmental endotoxin exposure with allergy and asthma prevention are consistent with hygiene hypothesis associations of other microbial exposures or infections with a lower incidence of atopic disease. Currently, microbe-derived products are being developed as potential therapies for allergy and asthma. Thus it is an ideal time to consider endotoxin as a prototype of a natural intervention with microbial components. Nature's ongoing experiment with endotoxin can provide clues for the development of effective and safe microbe-based products for disease treatment and prevention. This article will discuss (1) conventional paradigms in which endotoxin-induced immune modulation by T_H1-type induction leads to mitigation of T_H2-type immune development, allergen sensitization, and atopic inflammation; (2) newer concepts of T_H1-type immune responses that may provide additional asthma-protective effects by preventing airways remodeling; (3) home and environmental features that significantly contribute to endotoxin exposure; (4) different aspects of asthma mediated by endotoxin exposure; and (5) how to understand endotoxin's paradoxical nature of serving as both friend and foe. (J Allergy Clin Immunol 2002;109:379-92.)