To study the effect of transient hypoxia on neural function in utero, we examined brainstem auditory and somatosensory evoked potentials in chronically instrumented fetal sheep subject to altered maternal inspired gases. Moderate hypoxia without acidosis for 1 h, in 10 fetuses (fetal arterial pH = 7.37 +/- 0.03, PaO2 = 1.4 +/- 0.27 kPa) caused a transient depression of the later components of the evoked potentials. These recovered within 1 h. However, in 6 fetuses exposed to a second, acidotic, insult 2 days later, associated with a higher inspired PCO2 (fetal pH = 7.25 +/- 0.05, PaO2 = 1.17 +/- 0.28 kPa), there was greater impairment of the later components of the evoked potentials, with significant changes still observable 72 h later. In 4 fetuses a non-acidotic hypoxia was repeated instead and in these fetuses no persisting deficit was seen. These data suggest that there is a narrow threshold between a degree of intrauterine hypoxaemia associated with no sequelae and an insult causing persistent cerebral impairment, and that even mild acidosis may contribute to this.