Increased cord blood C-peptide levels in neonates born to mothers with gestational diabetes (GD) were directly correlated with the increased relative birth weight ratio (BWR) of these neonates. In addition, the percentage oxygen saturation of the cord blood was inversely correlated with cord blood C-peptide levels and with the relative BWR. These correlations were absent in neonates delivered to normal mothers. The results indicate the presence of both hyperinsulinaemia and mild hypoxaemia in neonates of mothes with GD. In poorly controlled diabetic pregnancy this hypoxaemia may constitute an important fetal risk factor.