The importance of good nutrition and exercise is well known, and parents have long worried about their children's diets and envied their high energy levels. Like so many life style habits, patterns of nutrition and exercise behaviors are typically established in early childhood. Poor diet and lack of exercise contribute to obesity, which has been associated with higher rates of many diseases (e.g. diabetes and heart disease). These diseases account for a major share of total health care costs and threaten to reverse the recent gains in life-expectancy in the United States. Though people typically think of young children as naturally getting lots of physical exercise, recent studies suggest this may not be the case. Poor nutrition and lack of exercise are jeopardizing the young children's abilities to do well in school and to stay in good health. A number of factors affect the nutrition and exercise habits of young children, including personal choices by parents and children, financial constraints (such as the availability, accessibility, and cost of healthy options), and public policies. Research on these factors offers insights into ways to encourage the development of healthy eating and physical fitness habits in early childhood and beyond. (Contains 2 figures and 38 endnotes.)