There is a clear association between antenatal infection/inflammation and preterm labour, with intrauterine infection complicating up to one third of preterm deliveries. In addition to this, there is now accumulating evidence that intrauterine infection and inflammation can lead to the development of a systemic inflammatory response in the fetus and subsequent tissue injury. The fetal inflammatory response is characterized by funisitis, high levels of pro-inflammatory cytokines in the amniotic fluid and cord blood, and systemic immune activation. This review discusses the evidence for this process and focuses on the clinical and experimental data supporting the hypothesis that these inflammatory processes contribute to brain and lung injury in the newborn.