Background Nitrogen dioxide (NO2), an oxidant gas that contaminates both outdoor and indoor air, is considered to be a potential risk factor for asthma. We investigated concurrently the effects of outdoor and indoor NO2 on the prevalence and incidence of respiratory symptoms among children. Methods A cohort study was carried out over 3 years on 842 schoolchildren living in seven different communities in Japan. Indoor NO2. concentrations over 24 hours were measured in both winter and summer in. the homes of the subjects, and a 3-year average of the outdoor NO2 concentration was determined for each community. Respiratory symptoms were evaluated every year from responses to questionnaires. Results The prevalence of bronchitis, wheeze, and asthma significantly increased with increases of indoor NO2 concentrations among girls, but not among boys. In neither boys nor girls were there significant differences in the prevalence of respiratory symptoms among urban, suburban, and rural districts. The incidence of asthma increased among children living in areas with high concentrations of outdoor NO2 Multiple logistic regression analysis showed that a 10 parts per billion (ppb) increase of outdoor NO2 concentration was associated with an increased incidence of wheeze and asthma (odds ratios [OR] = 1.76, 95% CI : 1.04-3.23 and OR = 2.10, 95% CI: 1.10-4.75, respectively), but that no such associations were found with indoor NO2 concentration (OR = 0.73, 95% CI:0.45-1.14 and OR = 0.87, 95% CI:0.51-1.43,respectively). Conclusions These findings suggest that outdoor NO2 air pollution may be particularly important for the development of wheeze and asthma among children. Indoor NO2 concentrations were associated with the prevalence of respiratory symptoms only among girls. Girls may be more susceptible to indoor air pollution than boys.