The arachidonic acid cascade leading to prostaglandins has been implicated in diabetic embryopathy. Both arachidonic acid and prostaglandin E₂ reverse the teratogenic effects of high glucose concentrations on neural tube development in mouse embryos in culture. Arachidonic acid supplementation also protects against diabetes-induced neural tube defects in vivo. In the present study, prostaglandin E₂ was measured directly in embryos from normal and diabetic mice. In normal mice a clear developmental pattern was seen. Prostaglandin E₂ levels were high during early formation of the cranial neural folds (day 8), declined during convergence and fusion of the cranial neural folds to form the neural tube (day 9), and were low after neurulation was complete (days 10 and 11). In addition, evidence in this study indicates that embryos have cyclooxygenase activity capable of generating prostaglandin E₂ during a brief developmental period preceding neural tube closure. In embryos from mice made diabetic (>13.9 mmol/l glucose) with streptozotocin, prostaglandin E₂ levels were significantly lower than normal during early development of the cranial neural folds (day 8), but similar to normal after the cranial neural tube had closed (late day 9 and day 10). The findings suggest that diabetes mellitus, as ascertained by high blood glucose, promotes cranial neural tube malformations by causing a functional deficiency of prostaglandin E₂ during early neurulation. Whether the altered PGE₂ pattern in the embryo indicates a diabetic effect on the arachidonic acid-prostaglandin cascade in cells of the embryo or in cells of extraembryonic or maternal tissues is uncertain.