Ultrasound brain scans were obtained daily for the first 5 days after birth, on day 7 and then weekly until discharge from hospital in 86 babies during a 12-month period. The babies weighed less than 1501 g or were less than 34 weeks gestational age. Fifty-one (59%) had normal scans, 34 (40%) developed periventricular haemorrhage, and seven (8%) developed periventricular cysts (associated with periventricular haemorrhage in six). Factors associated with periventricular haemorrhage were perinatal hypoxia, acidosis, hypercapnia and hypoxia after birth. Babies who developed periventricular cysts (periventricular leukomalacia) were more likely to have been hypoxic at birth and in four of the seven there had been a maternal antepartum haemorrhage. The association of perinatal hypoxia with periventricular haemorrhage and leukomalacia suggests that intrapartum events may predispose to the onset of these lesions which then develop postnatally. Prevention of perinatal hypoxia may play an important role in diminishing the disability caused by these conditions.