We studied the value of neonatal neurosonograms in preterm infants for predicting the development of cerebral palsy (CP). All infants born at less than 33 weeks of gestation who were admitted to the intensive care nursery of Thomas Jefferson University Hospital from 1982 to 1986 were serially studied with cranial ultrasound methods that reliably detect neonatal periventricular echodensities (PVE) and cysts that are 2 mm in diameter or larger. PVE were graded as mild or as moderate to severe, and cyst size was classified by widest diameter as either large (greater than or equal to 3 mm) or small (less than 3 mm). All 127 surviving infants with PVE or cyst formation or both were followed until spastic forms of CP could be diagnosed or excluded during late infancy. All 26 of the infants in whom spastic CP developed had moderate or severe PVE in the area superior and lateral to the caudothalamic notch as noted on the parasagittal images of the neonatal neurosonograms. All these infants also developed cysts in the periventricular region within the area of the previously noted PVE. Mild or moderate to severe PVE were not associated with the development of spastic CP in 101 infants. Cysts developed in the area of PVE in the neurosonographic studies of 42 of these 101 infants. Mild PVE without cysts and moderate to severe PVE without cysts had negative predictive values for CP of 69% and 76%, respectively. By contrast, the presence of moderate to severe PVEs with large cyst formation had positive and negative predictive values of 90% and 93%, respectively, and was the most sensitive and specific neurosonographic finding for predicting CP, with an efficiency of 92%. The presence or absence of intracranial hemorrhage did not increase the efficiency of the ultrasound test results.