This study examined the hypothesis that the development of hydrops fetalis after asphyxia in the 0.6 gestation sheep fetus would be associated with activation of the fetal renin-angiotensin system (RAS). Fetuses were randomly assigned to either sham occlusion (n = 7) or to 30 min of asphyxia induced by complete umbilical cord occlusion for 30 min (n = 8). Asphyxia led to severe bradycardia and hypotension that resolved after release of occlusion. After occlusion, plasma renin concentration was significantly increased in the asphyxia group compared with controls (P < 0.005) after 3 min (16.3 ± 5.3 vs. 4.1 ± 1.3 ng · ml¹ · h¹), and 72 h (30.6 ± 6.3 vs. 3.7 ± 1.2 ng · ml¹ · h¹). Renal renin concentrations and mRNA levels were significantly greater in the asphyxia group after 72 h of recovery. All fetuses in the asphyxia group showed generalized tissue edema, ascites, and pleural effusions after 72 h of recovery. In conclusion, asphyxia in the preterm fetus caused sustained activation of the RAS, which was associated with hydrops fetalis.