Fifty-eight preterm neonates evaluated by real-time sonographic scanning of the head were prospectively studied. They were divided into three groups: 13 with peri-intraventricular hemorrhage (PIVH) alone, 19 with subsequent ventricular dilatation and 26 control infants without ultrasound evidence of PIVH. At 12 months of age detailed neurological follow-up assessment was carried out. Five (8.6%) patients had major handicaps, 34 minor neurological abnormalities. The severity of the PIVH correlated with the neurologic outcome (p less than 0.02). The incidence of major handicaps was significantly greater in the group with ventricular dilatation (p less than 0.03). Among the infants with PIVH, major handicaps were only present if associated with grade III and IV. Severe posthemorrhagic ventricular dilatation increased the risk for major handicaps. Adverse neurological sequelae at follow-up appeared to be attributable to the extent of PIVH and aggravated by severe ventricular enlargement.