Abstract The objective of this investigation was to find out the histopathological changes of the placenta and to correlate them with fetal malformations and growth retardation in experimental diabetes. Diabetes was induced in Wistar rats at different stages of gestation by intraperitoneal injection of streptozotocin (STZ). The controls were either buffer treated or injected with STZ followed by 2–6 IU insulin until term. All fetuses and placentae were collected on day 20 of gestation. Fetuses of diabetic rats were significantly growth retarded. Maxillary hypoplasia, edema, gastroschisis, exencephaly and septal defects of the heart were the major malformations. Most of the experimental placentae weighed heavier relative to their body mass. Toluidine blue stained sections of the placentae revealed severe histological abnormalities. The unusually large sized placentae had extensive cystic degeneration, often with an increased population of leucocytes. Giant cells were very numerous. Perivascular fibrosis, persistence of fetal mesenchyme, edema, infarcts and vacuolisation were observed in the labyrinths. In the small placentae, the glycogen cells were fewer and the glycogen in them remained unutilized. Reduction of labyrinthine zone, hypovascularity, constriction of vessels, perivascular edema and platelet aggregation characterized these placentae. The placentae of externally malformed fetuses showed cystic degeneration; their labyrinths contained constricted and less extensive vascular network. Phagocytic giant cells, polymorphs and platelet aggregation were also marked. Placentae of externally normal looking fetuses also presented cystic degeneration, reduction in fetal vasculature, dilated maternal sinusoids and giant cell proliferation. Insulin treatment resulted in the preservation of most of the normal histology of the placenta which correlated well with the reduced fetal malformations.