Following induction of diabetes by a single injection of (IP) streptozotocin (STZ) to pregnant Wistar rats on days 2, 4 and 6 to 12 of gestation, fetuses and placentae were collected on day 20. The controls were either untreated or vehicle treated; alternatively following STZ injection, 2-6 IU of insulin was administered (sc) daily until term. The placentae were fixed in a glutaraldehyde and paraformaldehyde mixture and ultrathin sections were examined under the electron microscope. The structure of the vehicle treated control resembled that of the untreated control. The insulin control group had pathological changes similar to those of the diabetic group but with considerably less frequency. The giant cells in the basal zone of STZ group were numerous; they had abundant dilated cisternae of rough endoplasmic reticulum, intracytoplasmic fibrinoid and nuclear inclusions. The trophospongial cells presented numerous clear vacuoles, lysosomes and myelin bodies. Enlarged vacuoles often impinged deeply on the nucleus. The glycogen cells disintegrated resulting in cyst formation. In the labyrinthine zone, layer I trophoblast revealed increased number of large pores through which layer II trophoblast projected into the maternal sinusoid. Layer II had abundant glycogen, lipid droplets and lysosomes. Layer III had imbibed much fluid and appeared foamy with swollen organelles. Fibrinoid substance was produced by the giant cells, basophils and the trophoblast bordering the maternal sinusoids. Cyst development was preceded by degeneration of glycogen cells in the basal zone and of the trophoblast in the labyrinthine zone. Pronounced development of gonadotropin/somatotropin granule-like 'secretory granules' and smooth endoplasmic reticulum associated lipid droplets also characterised the labyrinthine trophoblast. The observed placental pathology appears to correlate well with the intrauterine growth retardation and fetal malformations recorded in this animal model.