Amniotic fluid (AF) is a biological medium uniquely suited for the study of early exposure of the human fetus to environmental contaminants acquired by the mother before and during pregnancy. Traditional diagnostic applications of AF have focused almost exclusively on the diagnosis of genetic aberrations such as Trisomy-21 and on heritable diseases in high-risk pregnancies. Since more than 50 anthropogenic compounds have been detected in AF, there is considerable potential in utilizing fetal protein biomarkers as indicators of health effects related to prenatal toxic exposure. Here, we focus on preterm birth (PTB) to illustrate opportunities and limitations of using AF as a diagnostic matrix. Representing a pervasive public health challenge worldwide, PTB cannot be managed simply by improving hygiene and broadening access to healthcare. This is illustrated by 15-year increases of PTB in the U.S. from 1989 to 2004. AF is uniquely suited as a matrix for early detection of the association between fetal exposures and PTB due to its fetal origin and the fact that it is sampled from women who are at higher risk of PTB. This critical review shows the occurrence in AF of a number of xenobiotics, including endocrine-disrupting compounds (EDCs), which are known or may reasonably be expected to shorten fetal gestation. It is not yet known whether EDCs, including bisphenol A, phytoestrogens, and polychlorinated biphenyls (PCBs), can affect the expression of proteins considered viable or potential biomarkers for the onset of PTB. As such, the diagnostic value of AF is broad and has not yet been fully explored for prenatal diagnosis of pregnancies at risk from toxic, environmental exposures and for the elucidation of mechanisms underlying important public health challenges including PTB.