Immunologic consequences of exposure to HIV-1 in utero are still poorly understood. This study investigates relationships between type-1 [interferon-γ (IFN-γ)] and type-2 (IL-10) cytokine production and maternal-infant HIV-1 transmission. Cord blood leukocytes from deliveries of 71 HIV-1–infected and 11 uninfected mothers were tested for in vitro IFN-γ and IL-10 production after phytohemagglutinin (PHA) stimulation. The infants of these HIV-1–infected mothers were followed prospectively after birth to determine HIV vertical transmission, and IFN-γ and IL-10 production was measured again at 6 mo. Median PHA-stimulated IFN-γ production was 210 pg/mL in cord blood cells from infected and 73 pg/mL from uninfected mothers (p = 0.12), and median PHA-stimulated IL-10 production was 491 pg/mL in cord blood cells from infected and 161 pg/mL from uninfected mothers (p = 0.004). PHA-stimulated IFN-γ and IL-10 production alone were not significantly associated with transmission, but relationships between the two cytokines differed among infected and uninfected infants of HIV-1–infected mothers. PHA-stimulated IFN-γ and IL-10 production was positively correlated among infected (r = 0.7, p = 0.12 in cord blood and r = 0.66, p = 0.03 at 6 mo) but not uninfected infants, and stronger relative production of IFN-γ to IL-10 was observed among exposed uninfected than among infected infants (p = 0.04). Exposure in utero to HIV-1 may augment production of IL-10 detectable in fetal cord blood. Stronger relative production of IFN-γ to IL-10 in cord blood cells from infants of HIV-1–infected mothers may be associated with protection against perinatal HIV infection.