The interpretation of fetal heart rate (FHR) patterns is the only available method to continuously monitor fetal well-being during labour. One of the most important yet contentious aspects of the FHR pattern is changes in FHR variability (FHRV). Some clinical studies suggest that loss of FHRV during labour is a sign of fetal compromise so this is reflected in practice guidelines. Surprisingly, there is little systematic evidence to support this observation. In this review we methodically dissect the potential pathways controlling FHRV during labour-like hypoxaemia. Before labour, FHRV is controlled by the combined activity of the parasympathetic and sympathetic nervous systems, in part regulated by a complex interplay between fetal sleep state and behaviour. By contrast, preclinical studies using multiple autonomic blockades have now shown that sympathetic neural control of FHRV was potently suppressed between periods of labour-like hypoxaemia, and thus, that the parasympathetic system is the sole neural regulator of FHRV once FHR decelerations are present during labour. We further discuss the pattern of changes in FHRV during progressive fetal compromise and highlight potential biochemical, behavioural and clinical factors that may regulate parasympathetic-mediated FHRV during labour. Further studies are needed to investigate the regulators of parasympathetic activity to better understand the dynamic changes in FHRV and their true utility during labour.