Background: Recent studies have suggested that epidermal barrier dysfunction contributes to the development of atopic dermatitis (AD) and other allergic diseases. Objective: We performed a prospective, randomized controlled trial to investigate whether protecting the skin barrier with a moisturizer during the neonatal period prevents development of AD and allergic sensitization. Methods: An emulsion-type moisturizer was applied daily during the first 32 weeks of life to 59 of 118 neonates at high risk for AD (based on having a parent or sibling with AD) who were enrolled in this study. The onset of AD(eczematous symptoms lasting >4 weeks) and eczema (lasting >2 weeks) was assessed by a dermatology specialist on the basis of the modified Hanifin and Rajka criteria. The primary outcome was the cumulative incidence of AD plus eczema (AD/eczema) at week 32 of life. A secondary outcome, allergic sensitization, was evaluated based on serum levels of allergen-specific IgE determined by using a high-sensitivity allergen microarray of diamond-like carbon-coated chips. Results: Approximately 32% fewer neonates who received the moisturizer had AD/eczema by week 32 than control subjects (P = .012, log-rank test). We did not show a statistically significant effect of emollient on allergic sensitization based on the level of IgE antibody against egg white at 0.34 kU(A)/L CAP-FEIA equivalents. However, the sensitization rate was significantly higher in infants who had AD/eczema than in those who did not (odds ratio, 2.86; 95% CI, 1.22-6.73). Conclusion: Daily application of moisturizer during the first 32 weeks of life reduces the risk of AD/eczema in infants. Allergic sensitization during this time period is associated with the presence of eczematous skin but not with moisturizer use.