The current use of animals to test for potential teratogenic effects of drugs and other chemicals dates back to the thalidomide disaster of the late 1950s and early 1960s. Controversy surrounds the following questions: 1. What was known about placental transfer of drugs when thalidomide was developed? 2. Was thalidomide tested on animals for teratogenicity prior to its release? 3. Would more animal testing have prevented the thalidomide disaster? 4. What lessons should be learned from the thalidomide disaster regarding animal testing for teratogenicity? We review the literature in order to address these questions.