Zidovudine (Zdv) is widely used to reduce maternal-infant human immunodeficiency virus transmission (HIV), but its consequences for disease progression among children infected despite Zdv exposure remain unknown. In a multicenter observational cohort study of 325 HIV-infected children born during 1986-1997, clinical progression was compared among infected children exposed or unexposed to Zdv during prenatal and perinatal periods. Zdv exposure was associated with 1.8-fold (95% confidence interval, 1.02-3.11) increased risk of progressing to AIDS or death after adjusting for year of birth, maternal CD4 cell count, maternal AIDS diagnosis, and subsequent antiretroviral therapy of the child. Mean log(10) viral copies at 7-12 weeks were higher among Zdv-exposed children (P=.004). No infected child treated early with multidrug therapy progressed to AIDS or died by 1 year, regardless of early Zdv exposure. More rapid disease progression was observed among infected children exposed during pregnancy or birth to Zdv if effective multidrug therapy was not initiated.