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Background Atopic dermatitis (AD) is a chronic relapsing, noncontagious skin inflammation characterized by dry skin and itch. Mutation in filaggrin gene leads to defective skin barrier, allowing entry of allergen and eliciting immunological response. Objectives The aims of this study were to investigate the prevalence of AD in Malaysian children and to understand the pattern of drug therapy. Such information could be useful to establish the relationship between ethnicity and family history of atopy and the development of associated signs and symptoms. Methods A cross-sectional survey was conducted among children attending kindergartens and nurseries. Standardized questionnaires were filled out by parents. Results Overall prevalence of AD was 13.4%. Of 384 participants recruited, the highest prevalence was observed in males, Malays, participants younger than 2 years, and those with atopic background such as asthma, hay fever, and family history of atopic diseases. Calamine and white soft paraffin were the preferred choice of nonprescription drugs, whereas topical hydrocortisone seemed to be the preferred choice of prescription drug in the management of AD. Conclusions The overall prevalence is comparable to that reported in the International Study of Asthma and Allergies in Childhood Phase One. There is an association between ethnicity and AD prevalence. Topical corticosteroids and emollients are the mainstay of AD management among Malaysians.