Kudos for already thinking about how to prepare your daughter -- indeed, even very young children can be resentful of a new sibling. Up until now your first child has had your undivided attention and love, and having a sibling may seem like a real loss for her. At the same time, it will also be a big gain. Siblings help children learn about sharing and cooperation, and they can be a source of friendship and support for the rest of their lives. You can start preparing your daughter for the baby around the beginning of your third trimester. Young toddlers don't have the capacity to retain an abstract idea like "a baby is coming" for very long, so talking about your pregnancy too soon may confuse her.
Your daughter will probably not have a very extensive speaking vocabulary when the baby's born, but her receptive vocabulary (the number of spoken words she is able to understand) is growing by leaps and bounds. This means that books about new babies, families, and sisters and brothers are perfect. Another idea is to look through photos of your daughter's first months and talk to her about what happens when a new baby comes home. You can even initiate play with baby dolls, mimicking the daily rituals she will soon see you perform with your newborn, like diaper changing, breastfeeding, and bathing.
Include your daughter in the birth as much as possible. Have her come to the hospital afterward, both to see that you are okay and to feel like part of the excitement surrounding the baby. Consider giving her a doll as a gift from her sibling. When you are back home, you can suggest that she care for her doll as you care for the baby, pointing out what a good job she is doing. Pretend play can be a great way for your daughter to express the mixed feelings she will likely be experiencing, so don't freak out if she hits or talks aggressively to her dolls or stuffed animals. This is a safe and healthy outlet for her. Include your daughter in your routines with her sibling, too. For example, when you're feeding the baby, have her sit next to you and tell her a story or sing a song together.
Finding ways to make your firstborn feel special is also important and may limit regression to baby behaviors (clinginess, wanting a bottle if she's given that up, crawling rather than walking), which is common when a new baby comes. Both you and your husband should find time to spend alone with your oldest. If you stay patient, loving, and supportive, she will not only continue to thrive but will grow to love (and probably exploit!) her promotion to big sister.
Originally published in American Baby magazine, May 2005. Updated 2009