Background. The epidemiology of congenital malaria was investigated in a hospital-based malaria surveillance study in Papua, Indonesia. Methods. From April 2005 to January 2010, 4878 delivering women and their newborns underwent prospective clinical review and malaria screening by peripheral blood microscopy. Findings. Congenital malaria occurred in 8 per 1000 (38/4884) live births, with Plasmodium falciparum accounting for 76.3% (29) and P. vivax for 15.8% (6) of infections. Maternal malaria at delivery (adjusted odds ratio [AOR], 9.5; 95% confidence interval [CI], 4.2–21.5; P < .001), age ≤ 16 years (AOR, 4; 95% CI, 1.4–12.1; P = .011), and prior malaria during pregnancy (AOR, 2.2; 95% CI, 1.1–4.4, P = .022) were independent risk factors for vertical transmission. Of 29 mothers and neonates with contemporaneous peripheral parasitemia, 17% (5) had discordant parasite species, suggesting possible antenatal malaria transmission. Newborns with malaria were at significantly greater risk of low birth weight (AOR, 2.8; 95% CI, 1.2–6.6; P = .002). Following introduction of dihydroartemisinin-piperaquine for uncomplicated malaria in the second and third trimesters of pregnancy, congenital malaria incidence fell from 3.2% to 0.2% (odds ratio, 0.07; 95% CI, .03–.15; P < .001). Conclusions. Congenital malaria is an important cause of neonatal morbidity in this region co-endemic for P. falciparum and P. vivax malaria. The introduction of artemisinin-combination therapy was associated with a significant risk reduction in the vertical transmission of malaria.