A prospective communi ty-based study of pregnant women was conductedrnto assess pregnancy outcome with emphasis to perinatal mortality in ruralrncommunities of Meskan and Mareko district in Gurage zone in Southern Ethiopia,rnbetween March 22 and August 21, 1997. Pregnant women were identified byrntrained enumerators through house - to - house visit and were followed monthlyrntill delivery, after which both the neonates and the mothers were visited at 7thrnand 28th days . Pretested questionnaires were used to obtain information on sociodemographicrncharacteristics, past obstetric history , health problems during thernindex pregnancy and labour, and the condition of both the neonates and thernmothers at the 7th and 28th days . Analysis made on 428 singleton births showedrna perinatal mortality rate of 44.4 per 1000 birth s. The stillbirth and early neonatalrnmortality rates were 21.0 per 1000 births and 23.9 per 1000 live births ,rnrespectively. The rates were found to be relatively low as compared to figuresrnreported for other sub-Saharan Africa. Both bivariate and multivariate analysisrnshowed that maternal height and gestational age were significantly associated withrnperinatal mortality . The risk of death was significantly higher among neonatesrnborn to short statu red mothers . Si milarly the risk of perinatal death was higherrnin preterm babies than term babies. Continuation of this study for longer period ,rntraining of TBAs and provision of health education to the the community aboutrnclean and safe management of delivery and cord treatment and educating mothersrnon nutrition and appropriate utilization of MCH services are recommended.