Objective: To assess the association between daily exposure to air pollution and lung function in school children. Methods: Panel study with a random sample of 118 students (between 6 and 15 years of age), enrolled in a public school of the city of Rio de Janeiro, state of Rio de Janeiro, and living within 2 km of the study site. Data on students' characteristics were obtained with a questionnaire, including the International Study of Asthma and Allergies in Childhood - ISAAC. Daily peak expiratory flow measurements were taken to measure lung function. Daily data on PM10, SO2, O3, NO2 and CO levels, temperature and humidity were provided by a portable monitor. Repeated measurements of lung function were associated with pollutant levels with a multilevel model adjusted for time trend, temperature, air humidity, exposure to smoking at home, presence of asthma, height, sex, weight and age of children. Results: Mean peak expiratory flow was 243.5 l/m (sd=58.9). The lowest mean peak expiratory flow was 124 l/m, and the highest, 450 l/m. For the 10 μg/m3 increase in PM10, there was a 0.34 l/min decrease in mean peak flow on the third day. For the 10 μg/m3 increase in NO2, there was a decrease between 0.23 l/min and 0.28 l/min in mean peak flow after exposure. CO and SO2 effects on students' peak flow were not statistically significant. O3 showed a protective result: an increase in 10 μg/m3 of O3 would be associated, after a day of exposure, with a 0.2 l/min increase in mean lung function. Conclusions: Even within acceptable levels most of the time, air pollution, especially PM10 and NO2, was associated with a decrease in lung function in children living in the city of Rio de Janeiro. © 2009 Faculdade de Saúde Pública da Universidade de São Paulo.