Birth asphyxia is a major cause of neonatal mortality and morbidity. It remains difficult to predict accurately neurologic outcome among survivors, particularly infants with moderate hypoxic-ischemic encephalopathy. Visual evoked potential (VEP) is a reproducible measure of cortical function and reflects acute changes in central nervous system status secondary to asphyxial insult. We performed serial VEPs on 36 term infants with documented birth asphyxia to investigate the relationship between VEPs and neurodevelopmental outcome at 18 months of age. Fourteen infants were neurologically intact at subsequent examination; all had normal VEPs during the first week of life. Twenty-two infants had died or were significantly handicapped at 18 months of age; 20 had abnormal VEPs persisting beyond day 7 of life. Abnormal VEPs accurately predicted abnormal outcome (100%) and were both sensitive (91%) and specific (100%). In 20 infants who were classified as moderately asphyxiated according to the criteria of Sarnat and Sarnat, even greater accuracy, sensitivity, and specificity (all 100%) were observed. VEPs demonstrate good correlation with neurodevelopmental outcome in term infants with birth asphyxia and provide accurate prognostic information useful in the clinical management of these infants.