The developing fetal endocrine pancrease produces both insulin and glucagon from an early stage in human development. These hormones do not cross the placenta and must be metabolized within the fetal-placental unit. Altered substrate metabolism in the gestational diabetic of the insulin dependent diabetic patient can pertubate normal fetal hormone homeostasis. Maternal hyperglycemia produces fetal hyperglycemia, hyperinsulinemia, and macrosomia while meticulous regulation of maternal glycemia abolishes the fetal macrosomia. Conversely, low levels of insulin or absence of fetal insulin results in fetal growth failure after 30 weeks' gestation. These examples, plus studies of the end-organ defects (receptors) in insulin metabolism, indicate that insulin is the major anabolic hormone of late fetal life. Glucagon appears to play less of a role in fetal life but has a homeostatic function in gluconeogenesis in the newborn. No specific growth-promoting role has been demonstrated for glucagon.