Horses suffer from Culicoides hypersensitivity, an IgE mediated type-I hypersensitivity in response to the salivary proteins of midges from Culicoides species. This disease is also called insect bite hypersensitivity (IBH), summer eczema, summer seasonal recurrent dermatitis, or sweet itch. Culicoides midges are present in the environment during the hot and humid season and disappear during winter months. Allergic horses show clinical symptoms during Culicoides exposure that resolve in winter. Culicoides hypersensitivity effect all breeds of adult horses and foals are never reported to get the disease. The clinical symptoms of this most prevalent, naturally occurring allergy in horses include pruritus, dermatitis and hair loss. Reactions range in severity and can be debilitating for the horse. The hypersensitivity reaction is mediated by the crosslinking of IgE to the high-affinity IgE receptor on the surface of sensitized mast cells and basophils. First, I present a comprehensive review of Culicoides hypersensitivity, specifically on the immune mechanism and diagnosis. Then, I review current diagnostic approaches and the need for a more robust biomarker of Culicoides hypersensitivity. Additionally, I focus on the importance of imported Icelandic horses to study allergic diseases, which provide additional justification for our studies. I used various experimental methods to evaluate the peripheral blood for identification of immune biomarkers. A multiplex assay was designed to identify disease relevant allergens and allergen-specific antibody titers as predictors of disease. The in-vitro PBMC stimulation experiments identified crucial role of basophils in IL-4 production in allergic horses after Culicoides allergen stimulation. We propose this basophil-mediate IL-4 is necessary for creating a biased microenvironment in Culicoides hypersensitivity. Finally, the PBMC were enriched for basophils and RNA-sequencing were performed to identify differentially regulated genes between allergic and healthy horses at various timepoints throughout Culicoides exposure. These results demonstrate new immunological biomarkers that can aid the current diagnostics and also have the potential for predicting Culicoides hypersensitivity in horses many months before the first clinical manifestation of disease. Additionally, the identification of disease specific allergens helped in designing allergen specific immunotherapy, which is currently under clinical trial. The identification of differentially regulating genes can not only serve as a diagnostic tool but also has the potential to monitor the outcome of immunotherapeutic success.