Less than half of the paediatric HIV infections recorded in Australia have resulted from perinatal transmission, but in recent years this has been the predominant mode of infection. There are 136 infants who are known to have been exposed perinatally to HIV in Australia: 49 of these are infected. Caesarean section is thought now not to reduce the risk of perinatal transmission (PNT); rather, the risk increases with duration of membrane rupture and rises rapidly after 4 h of membrane rupture. However, no data exist to show that interventions to expediate delivery after membrane rupture reduce the risk of PNT. Data such as these suggest that the majority of perinatal infections (probably about 60%) occur close to the time of delivery. While the overall risk of PNT for non-breast fed infants is approximately 20-25%, the risk of infection for the infant is considerably increased when there is evidence of increased maternal viral burden. Advanced maternal disease predicts that if the infant is infected there is more likely to be early progression of HIV than is the case for the less frequently infected infants of mothers who are asymptomatic. Bottle feeding may prevent infection of 10% of children exposed perinatally. Use of zidovudine by the mother in the third trimester and i.v. zidovudine during labour, followed by oral zidovudine for the infant for 6 weeks can reduce the PNT rate by two thirds, to about 8%. Approximately 3% of uninfected infants with perinatal HIV exposure may be found to be transiently virus positive but eventually become antibody negative and thus appear to have eliminated the virus. The risk of Pneumocystis carinii pneumonitis (PCP) cannot be predicted on the basis of CD4 count and it is recommended that all children of infected mothers commence PCP prophylaxis around the age of 6 weeks-2 months and continue that therapy until the age of 12 months or until it becomes clear that the infant is uninfected. The cumulative risk of AIDS increases rapidly during the first year of life to about 20%, then more slowly at a rate of about 2 or 3% a year. The shape of this curve reveals the bimodal progression of HIV disease in children. About 15-20% of children rapidly develop a severe immune deficiency, opportunistic infections and, in most cases, encephalopathy. There is a very high morbidity rate in this group of children, most of whom die before the age of 3 or 4 years. In contrast, 80-85% of children only become immunodeficient after a relatively long period, which is similar to or perhaps even longer than that in adults. Recent studies indicate that zidovudine antiviral monotherapy is no longer appropriate. While no clear alternative to monotherapy has emerged most would, wherever possible, commence antiretroviral therapy with a combination of two or three drugs including zidovudine plus didanosine or lamivudine. If a third drug is used it would probably be a protease inhibitor.