The marked discrepancy between fetal and placental growth in the second half of pregnancy is reflected by a shift in balance of supply and demand from a state of oversupply in early pregnancy to a situation of relative shortage in late pregnancy. To some extent this shift is compensated by extensive morphological remodelling and functional adaptation of the placenta. The major features of placental remodelling are an increase in uterine and umbilical blood flow, an enlargement of the villous surface area and a reduction in diffusion distance between maternal and fetal blood. In addition to placental remodelling and maturation a rise in transplacental gradient because of a gradual decrease in fetal concentration of some vital substrates like glucose and oxygen further adds to an increased flux to the fetus in late pregnancy. A redistribution of the total supply between fetus and placenta with a greater fraction going to the fetus also helps to maintain the balance between supply and demand. There seems to be some fetal growth restriction in late pregnancy with normal development of the placenta. In the presence of impaired placental growth partial compensation is achieved by the same physiological mechanisms, which as part of the normal ontogenic changes may be initiated at an earlier stage and may be more pronounced than in normal pregnancy. These compensatory changes however, remain insufficient so that fetal growth retardation results.