Diabetes mellitus in pregnancy is associated with increased maternal and perinatal morbidity and mortality. Pregnancy is a diabetogenic condition due to alteration in carbohydrate metabolism due to hormones. The abnormal metabolic environment created by hyperglycemia has a profound impact on both the mother and the fetus. There is a risk of progression of diabetic complications like established severe proliferative retinopathy and advanced nephropathy especially if coexisting with hypertension. The incidence of obstetric complications like spontaneous abortions, preeclampsia, hydramnios, and preterm delivery is increased in pregnant women with diabetes as compared with nondiabetic pregnant women. The fetal and neonatal effects of diabetes include increased risk of congenital malformations involving the heart and central nervous system, macrosomia, intrauterine growth restriction, intrauterine fetal death, unexplained stillbirths, shoulder dystocia, operative intervention, birth trauma, and perinatal asphyxia. Babies born to diabetic mothers are at increased risk of neonatal metabolic complications such as hypoglycemia, hyperbilirubinemia, hypocalcemia and hypomagnesemia. The management of pregnancy in women with diabetes mellitus remains a challenging problem and a multidisciplinary team approach consisting of obstetrician, dietician, endocrinologist and pediatrician should be followed. In the preconception period woman should be counseled regarding need for regular follow up, evaluation of end organ involvement, review of drugs, life-style and dietary modifications and folic acid supplementation. Self-monitoring of blood sugar is advocated (four to six times per day). Insulin therapy is recommended when nutritional therapy fails to maintain self-monitored plasma fasting glucose < 105 mg/dl and 2 hour postprandial blood glucose < 130 mg/dl. Vaginal delivery is preferable unless there is an obstetric or medical contraindication. A strict glycemic control during labor is important to prevent neonatal hypoglycemia after birth.