The aim of this work was to determine the impact of parental consanguinity on congenital malformations in a mixed urban and rural Arab community in Jerusalem, Israel. Arab mothers admitted to four hospitals in west Jerusalem were interviewed after delivery. Demographic and obstetric data were recorded. Neonatal data were extracted from the medical records of the nursery. When malformations were suspected, a 4- to 10-month follow up was achieved for confirming the diagnosis. Of 561 infants, 253 (45%) were born to consanguineous couples. The incidence of major congenital malformations in the offspring was 8.7, 7.1 and 2.6% in cases of first cousins, all consanguineous, and non-consanguineous couples, respectively. No association was found between parental consanguinity and prematurity (p = 0.357) or low birth weight (p = 0.589). Parental consanguinity was also associated with an increased incidence of death in previous siblings (p < 0.000). The increased incidence of congenital malformations and infant mortality in cases of inbreeding prompt the necessity of establishing programs to avoid these complications in the offspring.