Atopic dermatitis (AD) is a multifactorial disease that usually decreases the quality of life of affected patients. We monitored the incidence of AD and serum total IgE levels annually among nursery school children in Ishigaki Island, Okinawa, Japan, from 2001 to 2004. A total of 1731 children were enrolled. The prevalence of AD ranged from 3.7 to 11% in each year, with no significant difference between boys and girls. 869 children were examined at least twice. 71.6% (53/74) of AD patients regressed spontaneously, whereas 5.5% (44/795) of non-AD individuals developed AD during the 3-year follow-up. Increases in total IgE levels were greater and more rapid in children with long-term AD than in those who had spontaneously regressed, had newly-developed AD or did not have AD. The regression rate of AD was > 70% while new-onset AD occurred at a rate of 3.67%/person year in nursery school children of Ishigaki Island.