The primary function of brown adipose tissue in the newborn infant appears to be heat production. The influence of chronic hypoxia in utero on the potential thermogenic activity of brown adipose tissue following birth has not been determined. Pregnancy was prolonged in the rabbit by the intravenous injection of chorionic gonadotropin producing biochemical alterations consistent with chronic fetal hypoxia. Brown adipose tissue from postmature and control fetuses was incubated in vitro for one hour and the rate of lipolysis determined by the production of glycerol. Glycerol concentration before incubation served as an index of lipolytic activity in vivo and was significantly greater in the brown adipose tissue of postmature fetuses than in controls, suggesting that hypoxia, perhaps by a sympathetic response, had increased lipolysis. Lipolysis in the first hour in vitro was significantly reduced in postmature brown adipose tissue, indicating that previous chronic hypoxia did impair its lipolytic potential.