A prospective study was undertaken of the outcome at 1 year in 129 preterm infants of less than 34 weeks gestation (range 27 to 34 weeks) who underwent detailed neurologic assessment and ultrasound scanning in the neonatal period and again at 40 weeks postmenstrual age, and an independent neurodevelopmental assessment at 12 months chronologic age. Of the 129 infants, 37 (29%) had ultrasound evidence of periventricular hemorrhage. At 40 weeks postmenstrual age the infants were classified as neurologically normal, abnormal, or borderline on the basis of the neurologic examination. Of the 62 infants considered normal at 40 weeks, 57 (91%) were assessed as normal at one year, compared to only 14 (35%) of the 39 infants considered abnormal (P less than 0.001). Ten (85%) of the 12 normal infants with associated periventricular hemorrhage were normal at 1 year, compared to 47 (94%) of the 50 normal infants without periventricular hemorrhage, whereas 5 (25%) of 20 abnormal infants with associated periventricular hemorrhage and 9 (47%) of the 19 without periventricular hemorrhage were normal at 1 year. There was no direct correlation in individual cases between the severity of neurologic deficit and the presence or severity of periventricular hemorrhage. Infants with a cluster of abnormal signs were more likely to have later dystonia or cerebral palsy than those with marked hypotonia but no other abnormality.