Infants of diabetic mothers (IDMs) are at risk for perinatal brain iron deficiency that may target the developing hippocampus. The objective of this study was to evaluate hippocampally based recognition memory and infant development in IDMs with suspected brain iron deficiency (BID; cord ferritin </=34 microg/L) compared with IDMs with sufficient brain iron stores (BIS; cord ferritin >34 microg/L) using event-related potentials (ERPs). ERPs assessed neonatal auditory cortical responses to sounds and auditory recognition memory in response to the mother's voice compared with a stranger's voice. Thirty-two newborn IDMs had cord serum ferritin concentrations and provided neonatal ERP data (n = 23) and/or blinded 1 y developmental assessments (n = 28). Auditory cortical responses to speech and nonspeech sounds were similar in the BID and BIS groups. In the maternal voice recognition paradigm, peak latencies were shorter in the BID group than in the BIS group. Infants in the BIS group displayed a significant negative slow wave for the strangers' voices compared with the mothers' voices, whereas the BID group did not. Higher cord ferritin concentrations were correlated with larger negative slow waves at the right temporal (T4) electrode site. At 1 y of age, motor development was slower in the BID group than in the BIS group. IDMs suspected to have BID demonstrated impaired neonatal auditory recognition memory and lower psychomotor developmental scores at 1 y of age than IDMs with BIS. These impairments map onto areas of the developing brain known to be vulnerable to iron deficiency.