The majority of young American children regularly spend time in nonparental care settings. Such arrangements are associated with their experiences of common childhood illnesses. Why this linkage exists, how it varies across the socioeconomic spectrum, and whether it has implications for how parents arrange care are all important theoretical and policy issues. In this study, therefore, we applied a fixed-effects design within structural equation modeling to data from the National Institute of Child Health and Human Development Study of Early Child Care and Youth Development (n = 1,364). Results revealed that children were sick more often when cared for in a center and had more peer exposure in their primary care settings, although this latter association was observed only among children of the least educated mothers. Net of such factors, children in multiple arrangements did not experience more illness, but illnesses tended to decrease subsequent peer exposure as parents changed children's care arrangements. (author abstract)