Rationale: TGF1 is involved in airway inflammation and remodeling, two key processes in asthma pathogenesis. Tobacco smoke and traffic emissions induce airway inflammation and modulate TGF1 gene expression. We hypothesized that the effects of functional TGF1 variants on asthma occurrence vary by these exposures. Objectives: We tested these hypotheses among 3,023 children who participated in the Children's Health Study. Methods: Tagging SNPs rs4803457 C>T and C-509T (a functional promoter polymorphism) accounted for 94% of the haplotype diversity of the upstream region. Exposure to maternal smoking in utero was based on smoking by biological mother during pregnancy. Residential distance from nearest freeway was calculated based on residential address at study entry. Results: Children with -509TT genotype had 1.8-fold increased risk of early persistent asthma (95% confidence interval (CI): 1.11-2.95). This association varied marginally significantly by in utero exposure to maternal smoking. Compared to children with -509CC/CT genotype with no in utero exposure to maternal smoking, those with -509TT genotype with such exposure had 3.4-fold increased risk of early persistent asthma (95% CI: 1.46-7.80, interaction p=0.11). The association between TGF1 C-509T and lifetime asthma varied by residential proximity to freeways (interaction p=0.02). Children with the -509TT genotype living within 500m of a freeway had over three-fold increased lifetime asthma risk (95% CI: 1.29-7.44) compared to children with CC/CT genotype living >1500m from a freeway. Conclusions: Children with TGF1 -509TT genotype are at increased risk of asthma when they are exposed to maternal smoking during pregnancy or to traffic related emissions.