<b><i>Background:</i></b> Hyperglycaemic preterm babies suffer increased mortality and morbidity, but it is not known if these associations are causal or if treatment with insulin improves outcome. <b><i>Objectives:</i></b> We aimed to investigate the effect of neonatal hyperglycaemia, and its treatment with insulin, on mortality and morbidity in preterm lambs. <b><i>Methods:</i></b> Preterm lambs (137 days’ gestation; term = 148 days) were randomised to a 12-day intravenous infusion of saline (PremC; n = 39), 50% dextrose (HYPER; n = 47), or 50% dextrose + insulin (INS; n = 21). Term controls (TermC; n = 19) received saline. Dextrose and insulin infusions were titrated to maintain blood glucose concentrations (BGC) at 10–12 mmol·l^–1 (HYPER) or 4–6 mmol·l^–1 (INS). <b><i>Results:</i></b> HYPER lambs had higher BGC (mean (SEM); TermC: 5.6 (0.1), PremC: 5.5 (0.1), HYPER: 10.8 (0.6), INS: 6.2 (0.3) mmol·l^–1; p < 0.0001), higher mortality (n (%); TermC: 0, PremC: 2 (5), HYPER: 11 (23), INS: 0; p < 0.001), higher incidence of fever (n (%); TermC: 3 (16), PremC: 13 (33), HYPER: 26 (55), INS: 6 (29); p = 0.01) and lower weight gain (mean (SEM); TermC: 45.9 (2.9), PremC: 44.2 (2.1), HYPER: 28.4 (1.9), INS: 28.7 (2.8) g·kg^–1·day^–1; p < 0.0001). <b><i>Conclusions:</i></b> Neonatal hyperglycaemia in preterm lambs causes increased mortality and morbidity, and decreases growth. Insulin treatment to restore euglycaemia attenuated the increased mortality and morbidity, but not the decreased growth.