Second hand smoke (SHS) exposure is associated with increased incidence and severity of childhood asthma. We investigated whether, in turn, asthma diagnosis in a child is associated with cessation of smoking exposure in the child’s home. In the PIAMA birth cohort (n = 3963), parents reported on smoking in their home and on asthma diagnosis in their child, annually from birth to 8 years. We used generalized estimating equations to assess the association between asthma diagnosis in a child and cessation of smoking in the child’s home. Among children with residential SHS exposure, smoking stopped in 23.7% of the homes of children with newly diagnosed asthma as compared with 16.2% of the homes of children without asthma diagnosis (P = 0.014). For children with an asthma diagnosis, the relative risk of smoking cessation in their home was 1.36 (one-sided 95% confidence interval: 1.09, inf.) and changed little after adjustment for maternal education, parental allergy and child’s age. In most smokers’ households (76.3%), smoking continued when the child got an asthma diagnosis. Nevertheless, an asthma diagnosis in the child increased the probability of a smoke-free home for the child and its parents and siblings. Cross-sectional associations between SHS exposure and asthma may underestimate true associations, because exposure may have been reduced following diagnosis of the disease.