Objective Gestational diabetes mellitus (GDM) in Palau and across the Pacific Islands is a serious public health issue that is currently understudied. Methods This study was a retrospective cohort study that included 1730 women with a single live birth in Palau between January 2007 and December 2014. Results The overall prevalence of GDM among women in Palau was 5.5%. Women who were older (≥30 years) or obese (BMI ≥30) were more likely to have GDM than women who were younger (<30 years) or non-obese (BMI <30), respectively. When adverse birth outcomes were assessed, women with GDM were found to have significantly higher prevalence of high birth weight infants, cesarean sections, and neonatal deaths when compared to women without GDM. In fact, women with GDM were five times more likely to have a neonatal death than women without GDM (p = 0.008). Conclusion Reducing overall rates of obesity in the population could help reduce rates of diabetes and GDM in Palau. Based on this work, current practices for the identification, monitoring and treatment of women with GDM should be evaluated and strengthened in order to reduce neonatal mortality rates in Palau.