We studied the effect of diabetic nephropathy on the course of pregnancy, perinatal outcome, and infant development and determined the influence of pregnancy on maternal hypertension and renal function. Maternal proteinuria usually increased during pregnancy (greater than 3 gm/24 hours in 69%), and hypertension was present by the third trimester in 73%. The degree of proteinuria correlated with diastolic pressure and creatinine clearance. After pregnancy, proteinuria declined in 65% of the mothers, hypertension was absent in 43.5%, and the expected rate of fall in creatinine clearance was not accelerated. Among 35 patients, abortion occurred spontaneously or was performed electively in 25.7%, and 71% of the remainder underwent delivery before 37 weeks. Birth weight was related to maternal blood pressure and creatinine clearance. Neonatal morbidity was common, but the perinatal survival rate was 89%. Infants seen at follow-up without congenital anomalies had normal development at 8 to 36 months of age. We concluded that perinatal outcome has significantly improved for diabetic women with nephropathy.