Offspring of diabetic mothers experience an increased risk for type 2 diabetes but it is not known whether diabetic pregnancies also confer a higher inter-generational risk for diabetic complications. Because microalbuminuria is a sensitive indicator of glomerular damage, we compared the urine albumin:creatinine ratios (ACRs) between 65 infants of diabetic mothers (InfDM+) and 59 infants of non-diabetic mothers (InfDM-), and repeated the comparisons in 21 InfDM+ and 19 InfDM- when children were 5-19 months old. ACRs were higher among neonates compared with normal reference values for adults, but declined with increasing age. The only independent predictor of higher ACRs in a logistic regression model (⩾13 mg/mmol v. <13 mg/mmol) was the presence of delivery complications (odds ratio 2.95; P = 0.015). Neither high nor low birth weight was associated with higher neonatal ACRs. The most unique finding of the study was that InfDM+ had significantly lower ACRs than InfDM- [mean = 12.9 (median = 6.0) v. mean = 16.6 (median = 11.5), respectively at P = 0.05] even after adjusting for other variables using logistic regression (odds ratio 0.25; P = 0.001). In contrast, by 5-19 months, there was a trend toward higher ACRs among InfDM+ compared with InfDM- [mean = 6.3 mg/mmol (median = 1.9) v. mean = 3.0 mg/mmol (median = 2.5), respectively at P = 0.25]. Lower ACRs in InfDM+ may be due to developmental changes in fetal kidneys induced by hyperinsulinemia. Although the implications of this observation are unclear, it is possible that exposure to a diabetic intrauterine environment might influence the later risk for renal disease.