Background: Preventing the development of allergic skin disease in children is the best way to treat the disease. Objectives: Ultraviolet (UV)-free blue light phototherapy has been reported to treat atopic eczema. We evaluated the effect of neonatal phototherapy on allergic skin disease in children. Methods: We randomly recruited 117,041 children from an insurance research database. Those with neonatal jaundice and receiving neonatal phototherapy were classified as the icteric-phototherapy group (n = 4,744), those with neonatal jaundice and not receiving phototherapy were classified as the icteric-non-phototherapy group (n = 5,003), and those without jaundice were classified as the non-icteric group (n = 107,294). We reviewed claims from birth to age 5 years. The prevalence of atopic dermatitis (AD), clinical visit times, and topical prescriptions for allergic skin disease at different ages were compared among groups. Results: AD prevalence was lower in the icteric-phototherapy group than in the icteric-non-phototherapy group. Moreover, clinical visit times for allergic skin disease were lower at age 1–4 years, and topical agent prescription for allergic skin disease were lower at age 1–5 years, in the icteric-phototherapy group than in the icteric-non-phototherapy group. The decreased use of topical agents could reach 64.29%. The 5-year complications of skin disease and cancer in the phototherapy group were not higher. Conclusions: To our knowledge, this is the first study to report on the effect of UV-free blue light therapy on allergic skin disease in newborns. Blue light therapy in newborns may be a novel method to efficiently prevent allergic skin disease for at least 5 years.