Owing to its position the placenta is exposed to metabolic and hormonal diabetes-associated derangements of both mother and fetus, and one can expect some impact of the diabetic intrauterine environment on the placenta. One of its key functions is to provide the developing fetus with an adequate amount of nutrients, which are derived from the mother. This transport across the placenta has to be carefully regulated, because over- and undersupply may result in fetal growth disturbances. The fetus and newborn of diabetic pregnancies are characterized by excessive fat accumulation independent of the birth weight and the fetal fat associates with childhood obesity thus contributing to the obesity epidemic. Understanding the role of the maternal-placental-fetal interactions in determining fat accumulation in the fetus may thus have important implications for health care systems and the society at large. According to the Pedersen hypothesis maternal hyperglycaemia leads to fetal hyperglycaemia with ensuing fetal hyperinsulinism. Collective evidence suggests that placental glucose transport is flow limited, and changes at the transporter level, if at all, will not affect fetal glucose levels in maternal diabetes. Thus, maternal-to-fetal glucose flux is determined by the maternal-fetal glucose concentration gradient, which itself is also regulated by fetal insulin. Fetal insulin is a main driver for fetal fat deposition, and also correlates with the risk for childhood obesity. Because of the high density of insulin receptors on the placental villous endothelium in the third trimester of pregnancy, fetal hyperinsulinism regulates some processes also in the placenta such as glycogen deposition and vascularization of the villi, both altered in maternal diabetes. Diabetes mellitus is often associated with maternal hyperinsulinism either because of beta-cell compensation of insulin resistance or because of insulin administration to the mother. Early in gestation insulin receptors are located primarily on the microvillous membrane of the syncytiotrophoblast. Maternal insulin may then stimulate trophoblast proliferation and thereby drive placental growth. Moroever, insulin also stimulates matrixmetalloproteinases, which are implicated in extracellular matrix degrading, villous remodelling and angiogenesis. Thus, hyperglycaemia-associated maternal hyperinsulinism will modify placental growth and development in this critical period of gestation and thus have long lasting effects also on fetal development. Associations of maternal hyperglycaemia in the first trimester of pregnancy with fetal birth weight support this concept. Therefore, the main therapeutic goal in pre-gestational and gestational diabetes must be to avoid hyperinsulinism from occurring in both mother and fetus.