The impact of the environment on the outcome of children of very low birthweight at preschool age was assessed. Embracing an ecologic perspective, the study incorporated several family and sociocultural variables. The role of the environment was significant in explaining the cognitive, language, and temperamental status of these children at age 3 years. Although the high-risk cohort performed less well than a matched comparison group, maternal IQ and family sociocultural status essentially obscured differences on two of the three outcome measures. In addition, all three high-risk groups--children of very low birthweight with and without concomitant medical complications, and full-term children with perinatal asphyxia--obtained scores on all outcome measures within one standard deviation of the mean of the scores of the comparison group. Favorable early environmental circumstances appear to compensate frequently for difficult prenatal and perinatal insults. Biologic and environmental factors interact and appear differentially to influence emerging cognitive, language, and behavioral functions.