We have studied 82 consecutive intensive care nursery admissions to determine rates of colonization and incidence of fungal sepsis. Cultures were obtained from stool, gastric aspirate and skin at three different times. Infants studied ranged in gestational age from 23 to 38 weeks (mean +/- SEM 29 +/- 0.4 weeks). Nineteen percent of all infants were colonized with Candida sp.; stools were more frequently culture-positive than skin or gastric aspirates. Colonized infants began enteral feeds at a later time compared with noncolonized neonates. Five of the study infants developed fungal sepsis. One had congenital Candida albicans sepsis and died at 10 days of age; the other four had Candida parapsilosis sepsis and survived. The development of C. parapsilosis sepsis was significantly associated with gastrointestinal colonization. Our results suggest that early initiation of enteral feeds decreases gastrointestinal colonization with C. parapsilosis. Gastrointestinal colonization was strongly associated with the subsequent development of C. parapsilosis sepsis in this group of high risk neonates.