We investigated the incidence of congenital malformation in all infants with raised thyroid-stimulating hormone (TSH) levels on neonatal screening in Scotland between August 1979 and December 1993. Of 344 infants with elevated TSH, 31 (9%) had one or more malformations: 12 cardiac 15 noncardiac, and 16 dysmorphic syndromes (including 5 with Down syndrome). Criteria were devised to distinguish between definite or probable congenital hypothyroidism and transient TSH elevation. Congenital hypothyroidism was considered definite in 224 (65.1%) infants and probable in 11 (3.2%). Eighty-eight (25.6%) infants had transient TSH elevation, whereas thyroid status was uncertain in 21 (6.1%). In the definite group 12 (5.4%) infants had one or more malformations compared with 13 (14.8%) in the transient group. Cardiac malformation, noncardiac malformation, dysmorphic syndromes, and "sickness" were much more frequent in the transient compared with the definite group: 5.7% versus 1.8%, 8.0% versus 1.8%, 6.8% versus 2.7%, and 37.5% versus 7.1%, respectively. The incidence of congenital malformation in bonafide congenital hypothyroidism is lower than has been previously reported. The high incidence of congenital malformation associated with transient TSH elevation indicates the need to reevaluate the diagnosis of hypothyroidism in all infants with TSH elevation and concurrent illness or malformation.