The field of neonatal neurology, and specifically its focus on the premature infant, had its inception in neuropathologic studies. Since then, the development of advanced imaging techniques has guided our developing understanding of the etiology and nature of neonatal brain injury. This review promotes the concept that neonatal brain injury has serious and diverse effects on subsequent brain development, and that these effects likely are more important than simple tissue loss in determining neurologic outcome. Brain injury in the premature infant is best illustrative of this concept. This "encephalopathy of prematurity" is reviewed in the context of the remarkable array of developmental events actively proceeding during the last 16-20 weeks of human gestation. Recent insights into the brain abnormalities in survivors of preterm birth obtained by both advanced magnetic resonance imaging and neuropathologic techniques suggest that this encephalopathy is a complex amalgam of destructive and developmental disturbances. The interrelations between destructive and developmental mechanisms in the genesis of the encephalopathy are emphasized. In the future, advances in neonatal neurology will likely reiterate the dependence of this field on neuropathologic studies, including new cellular and molecular approaches in developmental neurobiology.