Epigenetic mechanisms provide new insights into how environmental changes may mediate the increasing propensity for complex immune diseases such as allergic disease. There is now strong evidence that early environmental exposures play a key role in activating or silencing genes by altering DNA and histone methylation, histone acetylation and chromatin structure. These modifications determine the degree of DNA compaction and accessibility for gene transcription, altering gene expression, phenotype and disease susceptibility. While there is already evidence that a number of early environmental exposures are associated with an increased risk of allergic disease, several new studies indicate in utero microbial and dietary exposures can modify gene expression and allergic disease propensity through epigenetic modification. This review explores the evidence that immune development is under clear epigenetic regulation, including the pattern of T helper (Th)1 and Th2 cell differentiation, regulatory T cell differentiation, and more recently, Th17 development. It also considers the mechanisms of epigenetic regulation and early immune defects in allergy prone neonates. The inherent plasticity conferred by epigenetic mechanisms clearly also provides opportunities for environmental strategies that can re-programme gene expression for disease prevention. Identifying genes that are differentially silenced or activated in relation to subsequent disease will not only assist in identifying causal pathways, but may also help identify the contributing environmental factors.