Endometrial caruncles were excised from 13 sheep (caruncle sheep) before pregnancy to restrict placental growth. In subsequent pregnancies, half the caruncle fetuses were growth retarded or small (weight more than 2 SD below mean weight for control fetuses) with the remainder, normal-sized (weight within 2 SD of mean weight for control fetuses). The caruncle and 16 control sheep, each with indwelling vascular catheters, were studied between 121 and 130 days of pregnancy. Oxygen delivery to and consumption by the pregnant uterus in caruncle sheep with small fetuses was significantly reduced compared to controls while oxygen extraction was significantly increased. Oxygen tension (P02) and content in the common umbilical vein and in the descending aorta were significantly lower in small caruncle fetuses compared to controls but only P02 was lower in normal-sized caruncle fetuses. Oxygen delivery to, and consumption by, the fetus was significantly reduced in normal-sized and in small caruncle sheep compared to controls while oxygen extraction was increased in small caruncle sheep. Utero-placental oxygen consumption was significantly lower in caruncle sheep with small fetuses compared to that in controls. Despite these changes, oxygen consumption by the gravid uterus and fetus, per kg of tissue mass, was similar in both groups of caruncle and in control sheep. Utero-placental oxygen consumption per kg of utero-placental mass in caruncle sheep with small fetuses was not significantly different to that in sheep with normal-sized caruncle or control fetuses, although it averaged only 25% of that in controls. It is concluded that intrauterine growth retardation following restriction of placental growth is associated with a reduced supply of oxygen to both the pregnant uterus and fetus and a redistribution of oxygen to the fetus. This is due to the disproportionate maintenance of fetal growth relative to that of the placenta, since oxygen consumption by either, in terms of tissue mass, was not altered. Further, the greater uterine and fetal extraction of oxygen suggests that a smaller margin of safety may exist between supply and demand in intrauterine growth retardation.