During an 18 month period, 120 preterm infants of 34 weeks' gestation or less were prospectively examined for periventricular leucomalacia (PVL) by cerebral ultrasound. Neurological and developmental assessment was carried out at 18 months of age corrected for prematurity in 82 surviving neonates. The developmental outcome (Griffiths development quotient) was above 80 and similar in infants with normal scans (n = 41), isolated periventricular-intraventricular haemorrhage (n = 13), and post-haemorrhagic hydrocephalus (n = 4), and no major handicap was diagnosed in these groups. By contrast, the prognosis was variable and poorer in infants with PVL (n = 24) and depended on the extent and site of the lesion. Infants with frontal PVL (n = 13) developed normally. Major sequelae (n = 8) were closely related to frontal-parietal PVL and frontal-parietal-occipital PVL and could be ascribed to the presence of cysts as well as to a persistent hyperechogenic ultrasonographic PVL appearance. A relation between size and site of the lesion and type and severity of the handicap was established.