Substantial experimental evidence now supports the notion that allergic diseases are characterised by a skewing of the immune system towards a T-helper cell type-2 (Th2) phenotype. Studies using both human and mouse model systems have provided key evidence for the role that Th2 cytokines play in driving many of the hallmarks of allergic inflammation. Furthermore, the signalling pathways by which Th2 cytokines exert their effects on airway target cells are rapidly being elucidated, and antagonists of the Th2 pathway are under active development. In this review, the current knowledge of the role of T-helper cell type-2 cells in asthma is summarised, focusing on how and where T-helper cell type-2 cells differentiate from naïve precursors. The signalling molecules and transcription factors involved in T-helper cell type-2 differentiation will be reviewed in detail, in an attempt to translate studies using genetically modified mice into meaningful insights about asthma and other allergic diseases.