Well, I don't hand down underwear because it seems gross....but, really, as long as it's been washed and bleached, I can't see any reason why it shouldn't be done. I hand down everything with my kids except for socks, underwear, and sneakers....the socks and underwear because of the ick factor, and the sneakers because in our family they're worn pretty much every day, so by the time they're outgrown they're either ruined or molded to the kid's feet!