Ninety eight newborn infants weighing less than 1500 g at birth and with gestational ages from 26 to 32 weeks were followed prospectively. They were grouped according to real time ultrasound scans in the neonatal period: infants in group A (n = 20) had periventricular haemorrhage (PVH) and normal ventricles; infants in group B (n = 26) had PVH and dilated ventricles (none with clinical hydrocephalus); and infants in group C, who formed the control group (n = 52), had no PVH and normal ventricles. At outpatient follow up a static image ultrasound scanner was used to measure the width of the lateral ventricles and brain hemispheres. The three groups of infants showed similar growth in occipitofrontal circumference, biparietal diameter, and brain hemispheres irrespective of a history of PVH or ventricular dilatation. The relation of ventricle size to biparietal diameter was similar in those infants in groups A (PVH alone) and C (controls) who had a good outcome. About a third (n = 8) of the infants in group B had persistent ventricular dilatation in relation to biparietal diameter and a poor outcome associated with developmental delay and cerebral palsy. By contrast, the remaining two thirds (n = 18) of the infants in group B who later had smaller ventricles in relation to biparietal diameter showed fewer neurodevelopmental sequelae. It is suggested that persistent ventricular dilatation in relation to biparietal diameter at follow up carries a bad prognosis, which might be due to brain atrophy.