This review distinguishes between physical responsiveness, behavioural arousal and awareness in fetal and newborn lambs, and summarises the physical and physiological factors which activate and suppress behavioural arousal. Important activators include: rising blood oestrogen concentrations just before birth; physical stimuli during delivery; exposure to cold on delivery, and; elevation in blood oxygen levels following the onset of pulmonary respiration. Suppressors of behavioural arousal and awareness are: low oxygen levels and high concentrations of progesterone and its metabolites in the fetal circulation, and; exposure to a warm intrauterine environment and to a circulating placental factor that inhibits activity including breathing.</br> In view of the relatively high levels of oxygen required to sustain awareness in adult animals, the low levels in fetal circulation, and the actions of other suppressors, it is unlikely that awareness occurs in the fetus. Nevertheless, fetuses perform a range of physical acts that would be supported or initiated by brainstem activity. In addition they show physical responses to potentially painful stimuli during late gestation, but it has yet to be demonstrated that these are linked to perception of pain. It is postulated that perception of pain could only occur once there is a level of oxygenation that supports overall awareness, and under normal circumstances this would only occur once the newborn starts breathing air. The implications for the welfare of fetal lambs and calves during experimental surgery, slaughter of the pregnant dam, collection of blood (serum) from fetuses at slaughter, and during fetotomy are favourable, indicating that current practices, when carefully undertaken, are humane.</br>