We sought to prospectively determine the value of variable and lambda decelerations noted during nonstress tests in predicting oligohydramnios and perinatal outcome. On the same day as having had reactive nonstress tests, 651 women underwent obstetrical ultrasound examinations for amniotic fluid index (AFI). Lambda and variable fetal heart rate decelerations were identified on sets of otherwise-reactive nonstress tests. Those with variable decelerations composed group 1; those without variable decelerations composed group 2. Demographic, perinatal outcome, and AFI data were compared, and group 1 inclusion criteria were varied. There were 200 nonstress tests in group 1 and 490 in group 2. There was a small difference between groups in maternal age (1.2 years, p = 0.02) and gestational age (0.8 weeks, p = 0.01), but no differences in gravidity, parity, race, or indications for testing (p >0.05). Oligohydramnios was present in 14.5% in group 1 and in 13.3% of group 2 (p = 0.68). In the cases of amniotic fluid index <8 cm, depth and duration of the variable decelerations did not correlate with AFI (R2 = 0.11, p = 0.09). Variable decelerations were associated with intrapartum "fetal distress," but lambda decelerations did not correlate with any outcome. Variable decelerations on an otherwise-reactive nonstress test did not correlate with amniotic fluid volume and were not cause for intervention in this study.