Several studies in recent years have suggested that there is a strong genetic component in the pathogenesis of IgE-mediated diseases. Epidemiologic studies have identified a number of genes that carry single base changes (single nucleotide polymorphisms) associated with parameters of allergy. What remain to be established are the mechanisms whereby genetic variation results in dysregulation of IgE-mediated responses. This is the task of functional genomics. In this article, some of the most powerful approaches that have been devised to provide a mechanistic explanation for the effects of genetic variation on the regulation of gene expression and function are discussed. Recent data on the impact of genetic variation on the regulation of CD14 are explored in the context of the potential role played by this gene in the pathogenesis of allergy. Also discussed is the notion that taken individually, each instance of variation might result in small effects. It is the combination of variations in the same gene and/or in genes arrayed along one functional pathway that might eventually lead to dysregulation strong enough to cause disease. In this scenario, the environment is likely to play an essential role in determining the functional outcome of genetic variation.