Intrauterine growth retardation and preterm birth are more frequent in African-American women and women of lower socio-economic status, but the reasons for these disparities are not fully understood. The physical and social environments in which these women live may contribute to these disparities. We conducted a multilevel study to explore whether conditions of mothers' neighbourhood of residence contribute to adverse birth outcomes independent of individual-level determinants. We analysed data from 105 111 births in 1015 census tracts in Louisiana during 1997-98, merging it with data from other existing sources on neighbourhood socio-economic status, neighbourhood physical deterioration, and neighbourhood density of retail outlets selling tobacco, alcohol and foods. After controlling for individual-level sociodemographic factors, tract-level median household income was positively associated with both birthweight-for-gestational-age and gestational age at birth. Neighbourhood physical deterioration was associated with these birth outcomes in ecological analyses but only inconsistently associated with them after controlling for individual-level factors. Neither gestational age nor birthweight-for-gestational-age was associated with the neighbourhood density of alcohol outlets, tobacco outlets, fast-food restaurants or grocery supermarkets. We conclude that measures of neighbourhood economic conditions are associated with both fetal growth and the length of gestation independent of individual-level factors, but that readily available measures of neighbourhood retail outlets are not. Additional studies are needed to better understand the nature of environmental influences on birth outcomes.