Background: Preterm labour is a common complication that contributes significantly to high perinatal morbidity and mortality. Premature babies are physiologically and metabolically immature. As a consequence, preterm infants are at higher risk than are term infants of developing many immediate and long term complications. Objectives: To compare morbidity and mortality of preterm infants to those born at term. Appropriate intervention, institutional deliveries and good neonatal care back up facilities. Methodology: The present prospective, randomized, comparative study was conducted over a period of 18 months and a total of 200 patients were selected and allocated in two groups. Study group who were in preterm labour and control group who were in full term labour. Perinatal outcome was measured by birth weight, gestational age, Apgar score at 1 and 5 minutes, admission in intensive care unit, respiratory morbidity, neonatal sepsis, need for emergency section and neonatal deaths. All babies were followed up for a period of 7 days after delivery. Results: Preterm infants were at significantly higher risk for over all morbidity and mortality than term infants. Out of 100 preterm infants 43 had low birth weight, 70 had respiratory morbidity, 68 had sepsis, 83 required ICU admission and 35 had early neonatal death while the corresponding figures for term infants were 10, 0, 4, 6 and 5 respectively. The mean Apgar score at 1 and 5 minutes of cases was 5.54 and 6.47 respectively. The mean Apgar score at 1 and 5 minutes of controls was 7.16 and 7.64 respectively. Emergency caesarean section was required in 39 cases and 27 controls which was statistically non-significant. Conclusion: Compared with term infants, preterm infants are at high risk of overall morbidity and mortality. Clinical suspicion, early detection and correction of risk factors, institutional delivery and good neonatal care back up facilities can improve the outcome of preterm labour.