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Little information is available about the effect of childhood atopic dermatitis (AD) on family function. The aim of this study was to identify the areas of family life most affected and their perceived importance. Intensive qualitative interviews with 34 families were conducted and 11 basic problem areas were identified. A detailed questionnaire was prepared, part of which addressed the perceived importance of particular issues using the framework of multi-attribute utility theory. The results from using this questionnaire in 41 families were analysed and a shorter 10-question one-page Dermatitis Family Impact (DFI) questionnaire designed (maximum score = 30). In affected families the mean DFI score was 9.6 ± 7.0 (range 0–27, n = 56) and in unaffected families the mean score was 0.4 ± 0.9 (range 0–3, n = 26, < 0.0001). The DFI could potentially be used as an extra measure in clinical studies, or to help guide appropriate management of AD.