BACKGROUND Amnioinfusion is thought to dilute meconium present in the amniotic fluid and so reduce the risk of meconium aspiration in newborn. AIM The effect of amnioinfusion in meconium-stained amniotic fluid in reducing the incidence of meconium aspiration syndrome, hypoxic ischaemic encephalopathy and perinatal mortality in newborn. MATERIALS AND METHODS The study was carried out in the Departments of Obstetrics and Gynaecology and NICU at Government Medical College, Kozhikode, in a time duration of one year from January 2014 to December 2014. This is a prospective case control study. We have studied 210 antenatal women admitted to the labour room with grade 2/3 meconium-stained amniotic fluid after 36 weeks of gestation. Amnioinfusion was given in 140 cases and 70 cases given standard care. Patients were monitored with electronic foetal heart monitoring and caesarean section was done in case of foetal distress or those who are in early labour. There was no significant difference between study group and control group according to age, parity, gestational age, presence of complications like hypertension/pre-eclampsia, postdated pregnancy, anaemia, etc. RESULTS Foetal heart rate decelerations occurred in 27 out of 140 cases (19%) in the study group and 23 out of 70 (33%) in control group (P <0.05). NEONATAL OUTCOME In our study those who received amnioinfusion, only 19% delivered babies with APGAR <9 at 1' while those who do not received, 36% delivered babies with APGAR <9 at 1' (P value of 0.009). Meconium aspiration syndrome occurred in 2.1% of cases in the infusion group and 11.4% in the non-infusion group (P<0.005). Respiratory distress was markedly reduced in amnioinfusion group 28% compared to 63% in controls (P=0.002). NICU admissions were 64% in control group compared to 22% in amnioinfusion group. Perinatal mortality and hypoxic ischaemic encephalopathy in the infusion group were nil as compared to 7% and 11% in the control group. CONCLUSION Intrapartum amnioinfusion is effective in reducing the incidence of foetal distress and improving the Apgar at 1 minute. The rate of meconium aspiration syndrome, respiratory distress, neonatal intensive care unit admissions and hypoxic ischaemic encephalopathy were also significantly less in the study group. There was no increase in the maternal and neonatal infection rates and complications. Therefore, intrapartum amnioinfusion is a beneficial procedure using simple equipment in the absence of modern electronic foetal monitoring facilities especially in low resource settings.