This article considers the estimation of the rate of vertical human immunodeficiency virus (HIV) transmission and the pediatric acquired immune deficiency syndrome (AIDS) incubation period using data from birth cohort studies. Standard methods of analysis, which ignore children whose infection status is not established, may lead to biased estimates. Methods based on modeling the disappearance of HIV antibody or appearance of virus are inefficient, as they essentially rely on a single variable. We describe an alternative model that takes into account clinical, immunological, and virological data. Maximum likelihood estimates of rate of vertical transmission, sensitivity of virus tests, pediatric AIDS incubation period, and age distribution at antibody loss are readily obtained by an EM algorithm. The method was applied to data from the European Collaborative Study and revealed evidence of temporal changes in the transmission rate and AIDS incubation period. This new approach, with possible modification, should allow efficient analysis of data from randomized controlled trials of interventions to reduce vertical transmission. It may also be applicable to other vertically transmissible infections.