Objective To determine the perinatal outcomes in fetuses with baseline fetal heart rate changes with preceding decelerations on the cardiotocography (CTG) trace, and to interpret CTG traces from the aspect of fetal physiology. Materials and methods A retrospective analysis of 500 consecutive CTG traces was carried out. The presence of repetitive variable and late decelerations followed by the changes in the baseline including baseline tachycardia and abnormal baseline variability were determined. Perinatal outcomes including Apgar scores and umbilical arterial pH at birth, NNU admission, and meconium-stained amniotic fluid were analyzed. We interpreted the changes in CTG based on fetal physiology. Results When repetitive variable and late decelerations were present without tachycardia (n = 81), none of the fetuses had an Apgar score <7 at 5 minutes or an umbilical cord pH <7. After the onset of fetal tachycardia (n = 262), fetuses showed decreased Apgar scores and umbilical arterial pH(p < .01), however, there was no significant difference in the rate of abnormal 5 min Apgar score, abnormal PH and NNU admission, if the baseline variability remained normal. However, if the baseline variability was abnormal (n = 44), (either increased or reduced) after tachycardia, there was a statistically significant increase in poor perinatal outcomes. Fetuses with abnormal versus normal variability had lower Apgar scores ≤7 at 5 min (29.6 versus 0.9%, p = .000); umbilical cord arterial pH <7 at birth (29.5 versus 0%, p = .000); increased admission to the NNU (27.3 versus 3.7%, p = .000) and increased incidence of meconium-stained amniotic fluid (38.6 versus 22.5%, p = .024). These serial changes in CTG could be interpreted and predicted by the application of fetal physiology. Conclusions There were significant differences in perinatal outcomes when fetuses were exposed to evolving intrapartum hypoxic stress culminating in an abnormal baseline fetal heart rate variability, which was preceded by repetitive decelerations, followed by an increase in the baseline heart rate. However, despite ongoing decelerations, if the baseline variability remained normal, none of the fetuses had a pH of <7. Therefore, the knowledge of fetal physiological response to evolving hypoxic stress can be reliably used to determine fetal compensation.