Diagnosis of asthma in childhood is challenging. Both underdiagnosis and overdiagnosis of asthma are important issues. The present review gives information about challenging factors for an accurate diagnosis of childhood asthma. Although underdiagnosis of asthma in childhood has always been the most important diagnostic problem, overdiagnosis of asthma has also been increasingly recognized. This is probably due to diagnosis of asthma based on symptoms and signs alone. Demonstration of variable airflow obstruction by lung function tests is the most common asthma diagnostic tests used in practice and is therefore strongly recommended in children who can cooperate. Recently, an asthma guideline combining the clinical and economic evidences with sensitivity and specificity of diagnostic procedures was developed to improve accuracy of diagnosis and to avoid overdiagnosis. This guideline provided an algorithmic clinical and cost-effective approach and included fractional exhaled nitric oxide measurement as one of the diagnostic tests in addition to lung function. Diagnosis of asthma in children should be made by combining relevant history with at least two confirmatory diagnostic tests whenever possible. Diagnosis based on short-period treatment trials should be limited to young children who are unable to cooperate with these tests.