A higher exposure to endotoxin was hypothesized to contribute to lower prevalence of allergic sensitization and hay fever in children growing up on a farm. We studied the association between house dust endotoxin and allergic sensitization. We randomly selected 740 children, aged between 5 and 10 years, from a group of children who participated in two cross-sectional surveys performed in Saxony-Anhalt, Germany, from 1992 to 1993 and from 1995 to 1996, such that 50% of the children were atopic or had a diagnosis of asthma. From 1996 to 1998, we collected living-room floor dust in the homes of 454 of these children (61%). Multiple logistic regression analyses adjusted for place of residence, sex, age, parental education, parental atopy, and pet ownership showed a negative association between exposure to endotoxin and sensitization to one or more allergens (aOR [95% CI] 0.95 [0.83; 1.10]) and two or more allergens (aOR [95% CI] 0.80 [0.67; 0.97]) using 0.35 kU/L as the cutoff value for sensitization. The protective effect was strengthened with increasing degree of sensitization. In conclusion, exposure to higher levels of house dust endotoxin is associated with lower prevalence of allergic sensitization in children.