Fetal monitoring during labor aims to identify fetal problems which, if uncorrected, may result in morbidity or death. A nonreassuring or abnormal fetal heart rate trace by cardiotocography (CTG) does not necessarily equate with fetal hypoxia and/or acidosis. However, in the absence of more objective data, the use of CTG often results in variable, but inappropriately high, operative delivery rates (forceps, vacuum, or cesarean delivery) for nonreassuring fetal status in many hospitals. The addition of fetal pulse oximetry (FPO) has the potential to improve the assessment of fetal well-being during labor. In this review we consider several aspects of FPO. Several factors, such as sensor to skin contact, uterine contractions, fetal hair, and caput succedaneum, influence the performance and use of FPO. Issues such as clinicians’ perspectives of FPO sensor placement, maternal perspectives of FPO during labor, and an economic analysis have all favored FPO. Several randomized controlled trials (RCTs) of FPO reported a reduction in cesarean delivery for nonreassuring fetal status when FPO was added to conventional CTG monitoring, with no difference in overall cesarean delivery rates. One large RCT reported no difference in mode of birth for any indication. Several issues relevant to the future of FPO have been addressed by these RCTs, the major issue being that it makes no difference to cesarean rates. It may be argued that FPO has a valid clinical use in monitoring the fetus with congenital heart block. Additionally, in situations of nonreassuring fetal status and dystocia, FPO may provide the necessary reassurance until adequate resources for cesarean delivery are available.