We performed a prospective randomized study to compare maternal and fetal outcomes in pregnancies with prelabour rupture of the membranes (PROM) at term with early induction of labour or expectant management, 126 women with singleton pregnancy, cephalic presentation and gestational duration > or = 37 weeks, were randomized either to immediate induction of labour with oxytocin (Group 1) (n=52), or conservative management (Group 2) (n=74). Women who constituted Group 2 were divided into 2 groups. The first group (Group 2A) (n=25) included women in whom spontaneous labour did not begin after a waiting period of 24 hours, in which case labour was induced with oxytocin i.e. expectant management. The second group consisted of women (Group 2B) (n=49) in whom labour began spontaneously within 24 hours. The base Caesarean section rate was significantly higher in Group 2 (28.4%) (p<0.05). The rates of Caesarean section in the Groups 1-2A-2B were 19.2%, 60%, and 12.2%, respectively for nulliparous and parous women together. The rate of fetal distress was significantly higher in Group 2 (p<0.05). For determining maternal outcomes, the other parameters such as clinical chorioamnionitis, fever before or during labour, receiving antibiotics before or during labour, postpartum fever, analgesia, anaesthesia did not differ in Groups 1 and 2. Women in Group 1 went into active labour sooner, had fewer digital vaginal examinations, had a shorter interval between membrane rupture and delivery, and spent less time in the hospital before delivery than those in Group 2 (p<0.05). Babies in Group 2 were more likely to receive antibiotics, and more likely to stay in an intensive care nursery for more than 24 hours, and more likely to receive ventilation after initial resuscitation than those babies in Group 1. For developing apnoea and hypotonia, there was no significant difference between Groups 1 and 2. However, for babies in Group 2A there was a significant difference. We conclude that immediate induction of labour with oxytocin does not increase the risk of Caesarean section, compared with a practice of expectant management. Women at term with prelabour rupture of the membranes should therefore be reassured that immediate induction with oxytocin currently appears to be the best policy with respect to maternal and neonatal morbidity.