Wow, that's a difficult situation. Hopefully there are others in the group who have dealt with it and can help you more than I can. The only experience I have is with my best friend when I was in grade school. She was being raised by her grandparents and her mother remarried and had a daughter with her husband. I know that it was very difficult for 'Nancy' because she always felt second best to her step-sister and had a hard time dealing with her mother not raising her but her step-sister was with her mother. There was a tremendous amount of resentment on Nancy's part that caused her grief when she reached the teen years. That is when we parted ways because she was going down the wrong path. My only advice would be to try to make it clear to the grandchild you are raising that he is no less lovable than the new baby. His mother was younger and had problems when he was born, so she made sure he would grow up in a safe place because she was not able to take care of him. Now his life is with you, but she has grown up and is able to care for a child, so she can raise the new baby. At least, I hope for everyone's sake, that will be true.

Balibird, is there any chance you will end up raising the new baby as well?

Also, I think your grandson's maturity and bond with you would be a factor in how much you tell him.

Maybe you should start slowly, and tell him only that his mother is living in a special house to get well. See how he takes that.

I also think that, under the circumstances, you can put off telling him about the new baby until you see if everything goes well. You could also simply tell him that she had a new baby and wait to see if your grandchild has any questions about it.

He could simply accept it for what it is, and gradually ask about it more and more as he thinks about it.

I am mentally preparing to be contacted by CPS if she goes back into drugs. Heck I will turn her in if I see any inkling of drugs. My other daughter and husband also said they would step in. If the need arises. Is good to have a plan.
When she delivered at 29 weeks last time, she could not feel the baby kick and hardly had a belly. He was a sick little baby. Was hospitalized at 25 weeks I think.
This time she has a way bigger bump. . And can feel kicks. 24 weeks. So the rehab intervention is certainly better for the baby. But her blood pressures are horrible, and her heart rate is never under 100bpm. One nurse told her it may be enlarged heart. Doc said heart attack stroke, or still birth, are risks here. Fun sitting in on that doc visit, as you can imagine. We go to the top University hospital here.
So I have to be careful with my boy, as he is a worrier. Would never tell him all the above, of course.
I have to be honest. Always have been. Need your pearls of wisdom, and like the suggestions so far. Keep them coming.
One friend said have him do some art pics of family and see where he places him self in the picture, after telling him. Could do this a few times and see how he is processing.
My little fella can ask me anything. But nothing like being prepared.

Let him be a kid. If he asks, just say something simple like "she loves you but she can't take care of you right now so she asked me to give you all the love I could". He needs warm fuzzies at 7,not reality. If the other baby does come to you (though it doesn't sound good for poor baby), you can answer his questions then. When our daughter died and we took in our gs, around age 3 he started asking me if I was his mom and then my younger daughter. We simply told him I was his "grandmom" and she was his auntie. We had some pictures of his mom and told him she was so happy to have him and loved him very much but Jesus wanted her with Him. That was enough. Reassuring them that they are loved is the most important thing.

I'd tell him only what's currently necessary, without actually lying. You're lucky to have the luxury of not telling him about the pregnancy. My dd was coming around at the time big bellied so it wasn't an option. Then, when she had the baby, she blurted it out first thing on the phone to him. Though I was listening in, she just first asked to talk to him without telling me. Nothing I could do about "Guess what?? You have a baby sister!!!" after the fact. I had a tough time, then, explaining why mommy didn't have the baby with her... and neither did we. (Foster care; I just wasn't taking on another).

If it's iffy if the baby's even going to make it, I wouldn't burden him with unnecessary facts.

They don't have a clue, do they? That's exactly the kind of thing my husband's daughter would blurt out to the kids. And by the time you get them off the line it's too late :-(

I suppose if that's the case I would wait 'til he asks questions, and then give him the most honest answer possible: "I don't know." Sometimes that's the only way to handle it, by letting the kids know that we're not sure what will happen, either, but that we'll take it day by day. Maybe that could be a lesson they'll learn to help them handle problems later on in life?

Well, its done, or should I say, just begun....
I had a good compilation of suggestions and it REALLY helped.
I told him this morning and plan on keeping home for a half day. I certainly wanted to tell him before my daughter did, or it leaked at school. We live in a very small community. She will be arriving here on Saturday. So it was down to the wire. I just brought up that she was pregnant. He got a big smile, with the typical" oh boy I am going to be a big brother, where is she now, yadda yadda." I proceeded to tell him that she is in a program to help her try to get off the drugs, so baby is safer. Then I told him everything is the same. We are his mom and dad, not to worry about anything. That is our job as parents, and talk to us anytime if questions.
I told him that she will be staying here a couple of days, and if he has any questions or worries, to talk to pops and I first, because that is our job. It gets complicated because now it is day by day when she will be hospitalized.
Then he said his science teacher explained that a baby is a pinch, no, maybe two pinches of X and some of Y. That's how they get their looks. Yup I said. (Told you he was smart)
"Oh, I guess I we will have another little baby in the house to take care of.."(savvy)
Me:" She is an adult and we need to see if she can take care of this baby on her own, but I don't know all the answers. She will get her own house and we can visit. Because when you are a grown up you go get your own place and people visit, and then go home to their own house."
"Well" he says: We will just love this little baby brother, no matter what!"
"That's right"
Sigh, stay tuned.

It sounds like you handled that wonderfully. I don't know if I could have done the same. I am hoping I will not have to do the same. My gk's are 4 & 1 - and since mom can't get them back, she is trying to get pregnant again.

Something I did for my grandson, since he has always been overly sensitive - He see's a counselor twice a month. It gives him someone to talk to openly and ask questions without being afraid to hurt anyone's feelings. It may not be something needed now - but always an option.

OH, I hope it went okay, thanks.
I am going to go down and have snack with him at school. He looked like he was going to go tell everyone the big news right away, when I dropped him off.
I wish he was 4 again!! He will be full of humdinger questions.
I thought it was interesting that his response was that we would wind up with the child.
He will be old enough to observe and draw his own conclusions.
Plus sadly we don't know if this child will survive.
But she is very obviously pregnant. It had to be addressed. Wish I could shelter him from all of it, but that is not life, is it?
At least for not any of us, here!

Balibird, at 7 years old he's just as likely to ask you how the baby got inside Mommy! HAHAHAHA!

OH SARA!! I will revert back to the cabbage patch or the stork!!