Abu Hurayrah (may Allah be pleased with him) reported that the Messenger of Allah (may Allah's peace and blessings be upon him) said: "If anyone of you sneezes, let him say: 'al-hamdu-lillāh (praise be to Allah)', and let his brother say to him: 'yarhamuk Allah (may Allah have mercy on you).' If he says to him 'Yarhamuk Allah', let him say: 'yahdeekum Allah wa yuslih balakum (may Allah guide you and amend your condition)!'"
عن أبي هريرة -رضي الله عنه- قال: قال رسول الله -صلى الله عليه وسلم-: «إذا عَطِسَ أحدكم فَلْيَقُلْ: الحمد لله، ولْيَقُلْ له أخوه يرحمك الله؛ فإذا قال له: يرحمك الله؛ فَلْيَقُلْ: يهديكم الله، ويُصْلِح بالكم».
شرح الحديث :
Sneezing is a blessing as it is good for one's health, for one releases vapors that would cause lethargy if they were not released. So it is desirable, when sneezing, to thank Allah, Who helped one release those vapors from his body. Indeed, sneezing is from Allah, and yawning is from the devil. So sneezing indicates that one is physically active, and so after sneezing one feels comfortable. If someone is around, he should say: "May Allah have mercy on you!" It is a useful prayer for someone who is physically well. The one sneezing should answer: "May Allah guide you and amend your condition!" So these are among the rights which the Prophet (may Allah's peace and blessings be upon him) explained for people to observe toward each other so as to develop amicability and rid their souls and hearts of rancor and grudge.