Advances in science and technology have allowed researchers to gain a better understanding of the pathophysiology leading to long-term neurologic damage in newborns. Intrapartum events are now known to be an infrequent cause of adverse neurologic outcome. Clinicians caring for women during labor must have an understanding of the pathophysiology of intrauterine asphyxia as well as an awareness of the capabilities and limitations of available intrapartum fetal assessment tools to diagnose intrauterine fetal asphyxia or predict neurologic outcome. This article reviews the physiology of acid-base balance and fetal gas exchange as well as the current scientific understanding of the role of intrauterine asphyxia in the pathophysiology of neonatal encephalopathy and cerebral palsy. Recommendations for care and documentation are included.