Twenty years ago, the prevalence of atopic sensitization and bronchial hyper‐responsiveness (BHR) in Xhosa children in a rural location in South Africa was very low. The aim of this study was to document the current prevalence of these two indices by comparing traditional rural Xhosa children, recently urbanized Xhosa children and established city white children, and to consider factors that may account for the observed increase in all of these groups. One thousand four hundred and fifty‐seven school children aged 10–14 years from the rural Transkei, from a recently urbanized peri‐urban area and from urban Cape Town areas were studied using a questionnaire. Four hundred and eighteen children had histamine challenges, and 492 tests for atopy were also conducted. As determined by bronchial challenge with histamine, 17% of rural and 34.4% of recently urbanized Xhosa children had increased BHR, a marked increase from the 0.03% and 3.17% prevalence of increased BHR previously found using the exercise challenge. The prevalence of increased BHR in white urban children was 33%. Sensitization to one or more aero‐allergens, as indicated by CAP RAST tests, was present in 36.6% of the rural Xhosa children with normal BHR and in 62.5% of those with increased BHR, a striking increase from that of previous studies. Atopic sensitization to one or more aero‐allergens, as indicated by a skin prick test (SPT), was found in 42.3% of the recently urbanized Xhosa children and 45% of urbanized white children. We have also documented sensitization to house dust mites in the rural Xhosa children for the first time. Passive cigarette smoking was not identified as a risk factor for increased BHR or atopy. Wood smoke in the indoor environment did not play a role in the rural Xhosa children's BHR. Ascaris infection does not appear to play any modifying role in the development of increased BHR in the rural or urban children. We have found that increases in BHR in the rural and recently urbanized Xhosa children develop independently of increases in atopy. Our results challenge the ‘hygiene’ hypothesis as a complete explanation for the recent dramatic worldwide increases in allergic diseases.