Pregnant women with diabetes are up to five times more likely to lose their baby, say scientists.
Both forms of the disease, known as type 2 and type 1, can trigger complications leading to infant mortality, either in the womb or shortly after birth.
They also raise the risk of requiring an emergency Caesarian section, according to new research.
The 15 year study of almost 813,883 Scottish deliveries identified 104 deaths around the time of birth in children of mothers with diabetes - 65 and 39 among type 1 and type 2 patients, respectively.
These rates are 4.2 and 3.1 times higher, respectively, than in the general Scottish population. Stillbirths were four times (T1D) and five times (T2D) higher.
The problem could be partly due to diabetic mothers being more likely to have larger babies, increasing the strain of pregnancy for mother and child.
Lead author Dr Sharon Mackin, of the University of Glasgow, said: "There were marked differences in pregnancy outcomes in women with diabetes compared to non-diabetic women."
Thousands of younger women are now developing type 2 diabetes, which is linked to lifestyle, because of the obesity crisis. It was once only seen in the over 40s.
It can be especially hard on women, because the disease can affect both mothers and their unborn children.
Diabetes can cause difficulties during pregnancy such as a miscarriage or a baby born with birth defects.
Women with diabetes are also more likely to have a heart attack and at a younger age.
Dr Mackin said diabetes in pregnancy remains relatively uncommon, affecting one in every 178 births.
But the prevalence of type 1, and particularly type 2 which is linked to obesity, "complicating pregnancy is increasing."
She added that this "may reflect higher prevalence of obesity, advancing maternal age and modest increases in at-risk ethnic populations."
Diabetes UK says the condition is the fastest growing health threat of our times and an urgent public health issue.
Since 1996, the number of people living with diabetes has more than doubled to more than 4 million.
Dr Mackin said Caesarean sections occur much more frequently in mothers with diabetes with two thirds (68%) of those with type 1 and 60 per cent women with type 2 having them - compared to a quarter (24%) of healthy individuals.
She added: "Pregnancy for women with diabetes remains high risk and much remains to be understood regarding causes and effective interventions for adverse outcomes.
"There is a major unmet need to improve perinatal outcomes for women with diabetes treated during pregnancy. Novel approaches and technologies will be needed to address this."
The study published in Diabetologia analysed data from the Scottish Morbidity Record 02 (SMR02) to cover all infants delivered between 1 April 1998 and 31 March 2013.
It included 4,681 (0.6%) mothers with T1D or T2D, of whom 3,229 (69%) had T1D for an average of 13.3 years, with the remaining 1,452 (31%) having had T2D for an average 3.3 years.
The study found more than half of all babies born to mothers with T1D were defined as large for gestational age (LGA). This also applied to over a third (38%) of those with T2D.
This is defined as an infant whose weight puts them in the heaviest 10% of newborns, and being so large carries with it an increased risk of complications during pregnancy.
These rates are 4.8 and 3.7 times higher respectively than the wider population, and while the trend in mothers with T2D shows a long-term fall in the proportion of LGA infants, it is becoming more common for mothers with T1D.
The exact reasons for these changes are not fully understood. The researchers said: "It would be of interest to be able to account for other maternal factors such as BMI (body mass index) and gestational weight gain which may impact infant growth and placental function."
They added: "Birth weight, prematurity, operative delivery and perinatal mortality represent key outcome measures in the management of pregnancy complicated by diabetes.
Previous research by the University of Newcastle, involving more than 400,000 deliveries, has also shown pregnant women with diabetes are almost four times more likely to have a baby with a birth defect.
Diabetes UK, which funded that study, said it suggests higher blood sugar levels in the mother raise the risk.
Around one in 13 babies born to a woman with type 1 or type 2 diabetes is affected by a major birth defect, such as heart disease and spina bifida. This compares with a risk of one in 50 for women without diabetes.