Maternal asthma status, prenatal exposures, and infant gut microbiota perturbation are associated with heightened risk of atopy and asthma risk in childhood, observations hypothetically linked by intergenerational microbial transmission. Using maternal vaginal (n = 184) and paired infant stool (n = 172) samples, we identify four compositionally and functionally distinct Lactobacillus-dominated vaginal microbiota clusters (VCs) that relate to prenatal maternal health and exposures and infant serum immunoglobulin E (IgE) status at 1 year. Variance in bacteria shared between mother and infant pairs relate to VCs, maternal allergy/asthma status, and infant IgE levels. Heritable bacterial gene pathways associated with infant IgE include fatty acid synthesis and histamine and tryptophan degradation. In vitro, vertically transmitted Lactobacillus jensenii strains induce immunosuppressive phenotypes on human antigen-presenting cells. Murine supplementation with L. jensenii reduces lung eosinophils, neutrophilic expansion, and the proportion of interleukin-4 (IL-4)+ CD4+ T cells. Thus, bacterial and atopy heritability are intimately linked, suggesting a microbial component of intergenerational disease transmission. Display omitted •Distinct prenatal vaginal microbiotas relate to maternal health and exposures•Variance in heritable bacteria and functions relate to infant markers of allergy•Fetal Lactobacillus jensenii inhibits primary human antigen-presenting cell activation•Vertically transmitted bacteria suppress airway allergic responses in vivo McCauley and Rackaityte et al. examine a large cohort of paired maternal-infant vaginal and stool samples and identify shared bacteria and microbial gene functions that relate to early-life features of atopy. They also demonstrate the allergy-preventative capacity of vertically transmitted Lactobacilli. The data suggest a microbial component of intergenerational allergy transmission.