Induction of labor (IOL) when the fetus appears small for gestational age (SGA) toward term may improve perinatal outcomes and prevent fetal death. If these fetuses are small as a variant of the normal spectrum, early induction may not improve outcomes and may cause obstetric complications. This study was undertaken to determine the impact of early IOL on neonatal outcomes and rates of maternal obstetric interventions in SGA term infants. The cohort included all term singleton deliveries and their neonatal outcomes occurring in 2004 to 2008. Maternal and neonatal outcomes of term (37–42 weeks) growth-restricted singleton deliveries were analyzed. Small for gestational age was defined as birth weight lower than the 10th percentile adjusted for gestational age and sex. The exposed group, termed early-induction SGA group, included women giving birth after IOL for suspected intrauterine growth restriction (IUGR) of a singleton SGA neonate at 37 to 39 weeks. The unexposed group, or no-early-induction SGA group, included women giving birth at 40 weeks of gestation or later and those who gave birth spontaneously to term SGA neonates at 37 to 39 weeks. Maternal characteristics, pregnancy and neonatal complications, and obstetric interventions were compared to evaluate benefits/drawbacks of early term IOL for IUGR. Of 37,342 women who had a singleton neonate at 37 weeks of gestation or later, 2378 (6.36%) neonates were born SGA. The early-induction and no-early-induction SGA groups included 445 and 1933 neonates, respectively. Most obstetric complications were similar in the 2 groups. Women in the early-induction group had significantly more hypertensive complications and a higher rate of cesarean deliveries compared with the unexposed group, and only 65.5% reached noninstrumental vaginal delivery (P < 0.0001). Neonatal Apgar scores at 1 and 5 minutes and sex were similar between the 2 groups. Compared with the unexposed group, the early-induction group had higher rates of hyperbilirubinemia necessitating phototherapy (odds ratio [OR], 1.75; 95% confidence interval [CI], 1.21–2.53) and hypoglycemia (OR, 2.38; 95% CI, 1.56–3.62). Two neonates in the early-induction group had respiratory complications. Necrotizing enterocolitis, sepsis, adverse neurologic outcomes, and need for resuscitation were rare and similar in both groups. No neonates died. The risk for any adverse neonatal outcome was ~2 times higher for the early-induction compared with the unexposed group (OR, 1.95; 95% CI, 1.46–2.61; P < 0.0001). The most significant danger in abstaining from IOL for IUGR at term is intrauterine fetal death. Of 37,342 singleton deliveries, 33 fetal deaths occurred at 37 to 42 weeks, 0.88 cases per 1000 live births at term; only 1 was an SGA fetus at 37 weeks. The risk for intrauterine fetal demise at term for non–early-induction SGA was 0.52 cases per 1000 live births, similar to that of the general term population (OR, 0.57; 95% CI, 0.08–3.85; P = 0.99). For suspected IUGR at term, awaiting spontaneous labor risks fetal decompensation, yet active IOL might increase rates of obstetric interventions and neonatal complications of early term delivery. This study found no apparent neonatal benefit for early term IOL for SGA neonates.