Fetal and neonatal development represents a critical window for setting a path toward health throughout life. In this review, we focus on intestinal immunity, how it develops, and its implications for subsequent neonatal diseases. We discuss maternal nutritional and environmental exposures that dictate outcomes for the developing fetus. Although still controversial, there is evidence in support of an in utero microbiome. Specific well-intentioned and routine applications of antibiotics, steroids, and surgical interventions implemented before, during, and after birth skew the neonate towards pro-inflammatory dysbiosis. Shortly after birth, a consortium of maternal and environmentally derived bacteria, through cross-talk with the developing host immune system, takes center stage in developing or disrupting immune homeostasis at the intestinal interface. We also examine subsequent immunological cross-talks, which involve neonatal myeloid and lymphoid responses, and their potential impacts on health and disease such as necrotizing enterocolitis and sepsis, especially critical disease entities for the infant born preterm.