The babies of Australian Aboriginal mothers have higher overall perinatal mortality rates than the babies of Caucasian mothers. They are also more likely to be preterm and of low birth weight. This study used Poisson regression models to adjust the perinatal mortality rates for differences in the gestational age and birth weight distributions of Aborigines and Caucasians. The intriguing finding was that full-term Aboriginal neonates (the group at lowest absolute risk) fare particularly poorly in comparison with Caucasian (adjusted relative risk: 2.9; 95% confidence interval; 1.5 to 5.5). Possible explanations for this phenomenon are explored.