Background: Fluocinolone acetonide 0.01% in a blend of refined peanut and mineral oils has been used as treatment for scalp psoriasis for several years, but only more recently for atopic dermatitis. Objective: We sought to study the effectiveness for atopic dermatitis, potential for adrenal axis suppression, and safety of the fluocinolone acetonide 0.01% in oil in children with atopic dermatitis, including children with atopic dermatitis and peanut allergic sensitivity. Methods: Three separate studies were performed in children aged 2 to 12 years with atopic dermatitis: multicenter double-blind, randomized, and vehicle-controlled trial; cortisol stimulation testing; and prick testing, patch testing, and monitored medication use in children with peanut allergic sensitivity. Results: Improvement of ≥50% was demonstrated within 2 weeks in 81% to 87% of 81 patients treated with active medication versus 39% of 45 children treated with vehicle oil alone. No adrenal suppression occurred after 4 weeks of therapy in 32 patients. None of 9 patients who were peanut sensitive reacted to either the full formulation or vehicle in prick or patch testing; 20 children who were peanut sensitive showed no allergic reactions after application of the medication. Conclusion: Fluocinolone 0.01% in peanut oil is an effective alternative to the use of topical corticosteroid agents in ointment, cream, and lotion forms in children. No evidence of adrenal suppression or adverse local effects were demonstrated in these studies. The medication was well tolerated in patients with peanut allergic sensitivity.