The aim of the study was to determine factors associated with indoor smoking in homes (ISIH) using a sample of households with at least one child aged 3 or younger and at least one smoking adult. In a defined German region, all households (n = 3,570) with a child aged 3 or younger were invited to participate in a study that tested the efficacy of an intervention for reducing exposure to environmental tobacco smoke. In 1,282 households, at least one parent reported daily smoking. Among these, 917 (71.5 %) participated in the study. ISIH was defined as smoking ‘in specific rooms only’ or ‘everywhere’. Cross-sectional data were analysed using regression analysis. Among the households, 37.5 % reported ISIH. ISIH was more likely if the youngest child had not visited a nursery (OR, 1.81; CI, 1.21–2.70) and if no private outdoor area was present (OR = 4.38, CI, 2.64–7.25). Lower household education level and partly unemployment in dual-parent households were associated with ISIH. Conclusion: Fostering nursery attendance and availability of a private outdoor area may protect young children living in household with smoking parents from environmental tobacco smoke.