Obstetric complications and newborn illnesses amenable to basic medical interventions underlie most perinatal deaths. Yet, despite good access to maternal and newborn care in many transitional countries, perinatal mortality is often not monitored in these settings. The present study identified risk factors for perinatal death and the level and causes of stillbirths and neonatal deaths in the West Bank and Gaza Strip. Baseline and follow-up censuses with prospective monitoring of pregnant women and newborns from September 2001 to August 2002 were conducted in 83 randomly selected clusters of 300 households each. A total of 113 of 116 married women 15-49 years old with a stillbirth or neonatal death and 813 randomly selected women with a surviving neonate were interviewed, and obstetric and newborn care records of women with a stillbirth or neonatal death were abstracted. The perinatal and neonatal mortality rates, respectively, were 21.2 [95% confidence interval (CI) 16.5, 25.9] and 14.7 [95% CI 10.2, 19.2] per 1000 livebirths. The most common cause (27%) of 96 perinatal deaths was asphyxia alone (21) or with neonatal sepsis (5), while 18/49 (37%) early and 9/19 (47%) late neonatal deaths were from respiratory distress syndrome (12) or sepsis (9) alone or together (6). Constraint in care seeking, mainly by an Israeli checkpoint, occurred in 8% and 10%, respectively, of 112 pregnancies and labours and 31% of 16 neonates prior to perinatal or late neonatal death. Poor quality care for a complication associated with the death was identified among 40% and 20%, respectively, of 112 pregnancies and labour/deliveries and 43% of 68 neonates. (Correction added after online publication 5 June 2008: The denominators 112 pregnancies, labours, and labour/deliveries, and 16 and 68 neonates were included; and 9% of labours was corrected to 10%.) Risk factors for perinatal death as assessed by multivariable logistic regression included preterm delivery (odds ratio [OR] = 11.9, [95% CI 6.7, 21.2]), antepartum haemorrhage (OR = 5.6, [95% CI 1.5, 20.9]), any severe pregnancy complication (OR = 3.4, [95% CI 1.8, 6.6]), term delivery in a government hospital and having a labour and delivery complication (OR = 3.8, [95% CI 1.2, 12.0]), more than one delivery complication (OR = 4.4, [95% CI 1.8, 10.5]), mother's age >35 years (OR = 2.9, [95% CI 1.3, 6.8]) and primiparity in a full-term pregnancy (OR = 2.6, [1.1, 6.3]). Stillbirths are not officially reportable in the West Bank and Gaza Strip and this is the first time that perinatal mortality has been examined. Interventions to lower stillbirths and neonatal deaths should focus on improving the quality of medical care for important obstetric complications and newborn illnesses. Other transitional countries can draw lessons for their health care systems from these findings.