Maternal diabetes during pregnancy may increase the risk of neurodevelopmental disorders in the offspring by increasing inflammation. A major source of inflammatory signaling observed in diabetes is activation of the receptor for advanced glycation end-products (RAGE), and increased RAGE expression has been reported in psychiatric disorders. Thus, we sought to examine whether maternal diabetes creates a proinflammatory state, triggered largely by RAGE signaling, that alters normal brain development and behavior of the offspring. We tested this hypothesis in rats using the streptozotocin (STZ; 50mg/kg; i.p.) model of diabetes induced during mid-pregnancy. Following STZ treatment, we observed a significant increase in RAGE protein expression in the forebrain of the offspring (postnatal day 1). Data obtained from whole-cell patch clamping of hippocampal neurons in cultures from the offspring of STZ-treated dams revealed a striking increase in excitability. When tested in a battery of behavioral tasks in early adulthood, the offspring of STZ-treated dams had significantly lower prepulse inhibition, reduced anxiety-like behavior, and altered object-place preference when compared to control offspring. In an operant-based strategy set-shifting task, STZ offspring did not differ from controls on an initial visual discrimination or reversal learning but took significantly longer to shift to a new strategy (i.e., set-shift). Insulin replacement with an implantable pellet in the dams reversed the effects of maternal diabetes on RAGE expression, hippocampal excitability, prepulse inhibition and object-place memory, but not anxiety-like behavior or set-shifting. Taken together, these results suggest that chronic maternal hyperglycemia alters normal hippocampal development and behavior of the offspring, effects that may be mediated by increased RAGE signaling in the fetal brain.