The hypothesis that intracranial hypotension due to excessive postnatal fluid loss places the premature infant at risk for germinal matrix and intraventricular hemorrhage (GM-IVH) was tested in preterm rabbits delivered at 28 and 29 days of gestation (term 32 days). Furosemide administered to newborn pups induced a diuresis that resulted in a 11% to 22% loss in body weight and a concomitant decline in muscle water (13% to 16%) and sodium (18% to 21%). Paradoxically, no change occurred in the water or electrolyte content of the brain even though cerebrospinal fluid and brain tissue pressure, but not blood pressure, declined. These changes were absent in littermates treated with saline. Microscopic examination of brain sections revealed a greater incidence of intracranial hemorrhage, particularly in the germinal matrix and choroid plexus, in furosemide-treated than in saline-treated preterm rabbit pups. These results are consistent with the hypothesis that intracranial hypotension promotes the incidence of GH-IVH in preterm animals.