BACKGROUND Ultrasound examination of the fetus enables diagnosis of many major malformations during pregnancy, providing the possibility to consider termination of the pregnancy. As a result, in many cases the incidence of malformations at birth does not represent their true incidence. OBJECTIVES To determine the impact of prenatal diagnosis and pregnancy termination on the relative incidence of malformations at birth among Jews and Muslim Arabs in Israel. METHODS Data on selected major malformations in 2000-2003 were collected from the two large central databases of the Ministry of Health and the Central Bureau of Statistics which contain information regarding births, stillbirths and terminations of pregnancies. RESULTS For many malformations the total incidence was much higher than the incidence at birth. For almost all of the malformations studied, the total incidence was higher in Muslims than in Jews and the differences were further accentuated among the liveborn because of the differences in the rate of pregnancy terminations. CONCLUSIONS In order to detect possible influences of environmental or genetic factors on major malformations in Israel, it is critical to look at data including pregnancy terminations, stillbirths and live births.