Background: Although domestic pet ownership is on the rise, the impact of early life pet ownership on children's pet sensitization and atopic dermatitis (AD) remains controversial. Methods: Shanghai Allergy Cohort is an ongoing prospective study followed up to the age of 5 years. Pregnant mothers were recruited and their offspring were followed up every year by a group of pediatricians. Information on furred pet ownership was collected by the questionnaire. AD was diagnosed by dermatologists according to disease history and Williams criteria at 5 years ± 1 months. Skin prick test (SPT) was performed to determine sensitization to specific allergens. Multiple logistic regression models were used to evaluate the associations between pet ownership and AD, dog/cat sensitization. Results: In the 538 children at preschool age, 112 (20.82%) were diagnosed with AD. Dermatophagoides pteronyssinus and Dermatophagoides farina were the most common allergens, and almost 10% of children were positive to dog and cat. The percentage of positive SPT reactors at 5-year old was 65.28% in the group of children with AD, higher than that in non-AD group (44.57%). Domestic pet ownership at both infant and preschool period was positively associated with an increased risk of sensitization to dog (OR adjusted = 2.85 [95% CI: 1.08-7.50 for infant exposure], OR adjusted = 2.73 [95% CI: 1.33-5.61] for preschool exposure), and interestingly, pet ownership at infant period negatively associated with higher risk of AD at 5-year old (OR adjusted = 0.33 [95% CI: 0.12-0.88]). Conclusion: This is the first prospective birth cohort study in Shanghai that found half of preschool children had positive allergen sensitization even in the non-AD children. Although early life exposure to dog may increase the risk of dog sensitization, it significantly decreased the risk of AD. The underlying mechanisms warrant further investigations.