In a prospective study, 100 premature infants were studied with computed tomography (CT) brain scans within the first week of life. In 44 of these,hemorrhages originated from the subependymal germinal matrix, and ranged in severity from isolated germinal matrix hemorrhages to blood-filled, dilated ventricles with extension of hemorrhage into the brain parenchyma. A system of grading the severity of hemorrhage was developed. Grades I and II hemorrhages resolved spontaneously and grades III and IV were associated with progressive hydrocephalus. Asymptomatic hemorrhages that would not have been diagnosed on clinical grounds were detected by CT. This study offers a clearer understanding of the true incidence and natural history of cerebroventricular hemorrhage and associated hydrocephalus in premature neonates and may clarify etiologic factors and identify children at risk for subsequent neurologic abnormalities.