Contraceptive research and development in the US has been slowed by declining investment at a time of rising costs and increasingly complex US Food and Drug Administration (FDA) regulation. Public and private investment in contraceptive research reached its maximum in the early 1970s. Since then, investment has stagnated while research and development costs have continued to rise. Development of a new product costs between 50-60 million dollars and corresponds to over 2/3 of its legal life of 17 years. In addition, the majority of pharmaceutical liability cases in the past few years have involved contraceptives. Although recent epidemiological studies have demonstrated that oral contraceptives (OCs) have some significant benefits, such as prevention of at least 2 types of cancer, OCs continue to be held responsible for secondary cardiovascular effects as well as for some effects whose true etiology has not been demonstrated. The growing use of contraceptive sterilization at the expense of most other methods and the opposition to making contraceptives easily available among those who believe that contraception encourages premarital sexual activity are other factors which have resulted in the near abandonment of contraceptive research and development by American pharmaceutical companies, who no longer consider family planning a viable market. In the US, most research and innovation in the field of contraception now comes from not-for-profit institutions such as Family Health International (FHI) the Population Council, and to a lesser extent the Program of Applied Research for Fertility Regulation and some universities. Such organizations receive some research funds from the Agency for International Development and the National Institutes of Health. The role of FHI in the development of the contraceptive sponge and of the Population Council in developemnt of the Copper T 380A IUD demonstrate the transfer of supremacy in contraceptive development from the pharmaceutical industry to social organizations. 2 or 3 sustained release steroid systems, including the Norplant subcutaneous implant system which releases levonorgestrel, the simpler Norplan II system, biodegradable injectable microcapsules containing norethindrone, or subcutaneous steriod pellets, are likely to acheive FDA approval by the early 1990s. Other efforts are underway to develop contraceptive substances using drugs already authorized by the FDA for other indications. Examples of this approach are the use of propranolol and chlorhexidine as vaginal spermicides. A small number of studies are continuing on simplified methods of sterilization appropriate for Third World Countries. An anti-zone pellucida or anti-sperm pregnancy vaccine may be at the stage of clinical testing by 1990, but doubts about product liability may slow prevent clinical utilization in the US. FDA regulations specify the characteristics of required studies but not their location. Because funds are limited but the need for contraception is universal, it is probable that international cooperation in contraceptive development will assume increasing importance.