From the population of a neonatal intensive care unit, 114 infants and their families were followed from birth to age 3 1/2 years. Infants showing massive brain damage at birth and/or severe mental retardation at 7 months of age were excluded from this analysis. The remainder were predominantly poor and nonwhite. The group showed normal cognitive development through age 15 months. By 28 months of age and thereafter, a severe decline in cognitive status proved to be associated with social class. In addition, serious behavioral maladjustment led to improverished cognitive development. The incidence of maladjustment was unrelated to social class. The impact of maladjustment on test scores was significant in all classes, but greater for the higher rather than the lower socioeconomic social groups. Neither neurologic pathology (excepting severe brain damage) nor gestational age (small for gestation age [SGA] vs appropriate for gestational age [AGA]) had a significant effect on IQ scores at 3 1/2 years of age. It is suggested that environmental deficits and stresses impair early cognitive and psychosocial development for both full-term and premature infants, but that the latter group is more vulnerable to environmental insufficiencies than are full-term babies.