Squirrels gain access to your attic through gaps in the eaves or fascia boards of your home. Once inside, they may give birth or continue to access other parts of the home in search of food. The best way to stop this is to prevent entry before it happens. If you have a squirrel infestation, it is essential that you first remove the infestation before initiating any repairs. (See Internet Center for Wildlife Damage Management for more details on control.) This is particularly important in the spring and early summer as female squirrels may have young inside the house that are not yet ready to leave the nest. If the mother is prevented from accessing the nest, the young will die inside the house, resulting in another problem.

If the infestation is no longer present, replace damaged wood with new lumber, or repair damaged boards using heavy gauge 1/4-inch screen mesh ("hardware cloth") or aluminum flashing to prevent them from regaining entry. Steel wool may be securely fitted into small openings to prevent entry. Additionally, trim back overhanging tree branches at least 10 feet from the roof line to discourage squirrels from exploring on your roof.

Finally, inspect your house's exterior from top to bottom on an annual basis, making repairs to the building as necessary; also shore up any weak spots to prevent reinfestation.

Resources: (online)
ICWDM
http://www.hsus.org/wildlife/urban_wildlife_our_wild_neighbors/solving_problems_with_your_wild_neighbors/solving_problems_with_squirrels.html