While the modern approach to management of diabetic pregnancy has reduced the perinatal mortality significantly, the neonatal morbidity remains high. This study has investigated factors which may account for the persisting high neonatal morbidity when birth trauma has been virtually eliminated and the incidence of respiratory distress syndrome (RDS) considerably reduced. Major congenital malformations emerge not only as the leading cause of perinatal losses but also as an important cause of morbidity. Delivery before 37 weeks increased the incidence of RDS and hypocalcemia, and it is suggested that, when strict metabolic control is used and with the help of facilities to monitor the fetus closely in the last weeks of pregnancy, the number of infants delivered at this early date can be further reduced. The present study also indicates that normoglycemia should also be encouraged on the day of delivery as maternal hyperglycemia at this stage increases the incidence of neonatal hypoglycemia. Jaundice, which very commonly affects newborn infants of diabetic mothers, is influenced by the use of oxytocin for vaginal delivery and by infant overweight (> 90th percentile) at birth, factors which are not beyond control. Finally, route of delivery per se may not be important in relation to neonatal morbidity.