BACKGROUND The importance of amniotic fluid volume as an indicator of foetal status is a relatively recent development. Oligohydramnios, AFI<5 cm has been circumstantially associated with a variety of ominous pregnancy outcome such as perinatal death, foetal distress in labour, poor infant condition at work. We wanted to assess the association of perinatal outcome in cases with oligohydramnios with AFI<5 cm diagnosed at term and compare it with perinatal outcome of controls (AFI 5-25 cm). METHODS This prospective observational study was conducted in Bankura Sammilani Medical College and Hospital. 100 randomly selected cases with AFI < 5 were analysed for perinatal outcome and compared with 100 controls (AFI 5-25). All relevant information was recorded and was appropriately analysed with SPSS 18.0 software. Antenatal women with gestational age of 37 completed weeks and above attending our Out Patient Department or labour rooms or emergency department were included in the study. RESULTS Women with oligohydramnios were more commonly associated with abnormal antepartum foetal heart rate (FHR), higher rate of caesarean section, Apgar score less than 7 or NICU admission. CONCLUSIONS This study concluded that oligohydramnios is associated with a high rate of pregnancy complications in the form of caesarean section and increased perinatal morbidity and mortality. Early intervention in the form of induction of labour, close intrapartum monitoring, artificial rupture of membranes in active phase of labour and grading of liquor and early decision-making regarding mode of delivery are the steps to be taken to prevent poor perinatal outcome. Immediately after birth, proper resuscitation by a paediatrician is mandatory.