The authors analyzed data from a national survey of 2003 directors of licensed child day-care centers to determine employee smoking policies, measure compliance with state and local employee smoking regulations for child day-care centers and state clean indoor air laws, and to estimate the extent of exposure to environmental tobacco smoke in these settings. Forty states regulated employee smoking in child day-care centers, but only three states required day-care centers to be smoke-free indoors. More than 99% of licensed child day-care centers had employee smoking policies that complied with the appropriate state or local smoking regulations. Nearly 55% of centers were smoke-free indoors and outdoors, and 26% were smoke-free indoors only. The best predictors of more stringent employee smoking policies were location in the West or South, smaller size, independent ownership, or having written smoking policies. Despite the presence of strong smoking policies at the majority of licensed child day-care centers, more than 752,000 children in the United States are at risk for environmental tobacco smoke exposure in these settings. Health care professionals and parents should insist that child day-care centers be smoke-free indoors and, preferably, smoke-free indoors and outdoors.