The value of regular cerebral ultrasound scanning in predicting cerebral palsy (CP) was assessed in very low birthweight infants. The infants were scanned before discharge, and their vision and hearing were assessed at age 9 months and neurodevelopment was assessed at 18 months. Ultrasound abnormalities, defined before the study, were periventricular haemorrhage (PVH), "prolonged flare" (echodensity persisting in the periventricular white-matter for more than 2 weeks without cavitating), and cystic periventricular leukomalacia (PVL). The incidence of these three conditions in surviving infants was 49%, 15%, and 8%, respectively. 158 infants survived to be discharged from hospital and 156 had neurodevelopmental assessment at 18 months of corrected age. All infants with PVH alone and confined to the lateral ventricles were normal at follow-up. The presence of cysts accurately predicted abnormal outcome (94%) and was highly specific (96%). Prolonged flare predicted adverse outcome but the accuracy (79%) was less good than for cystic PVL. 12 infants had CP, and 10 of these had ultrasound evidence of PVL. 8 of the 13 infants with cysts had spastic CP. 4 of these were walking independently and had mild CP. No infant with ultrasound evidence of a single cyst or with cysts confined to the frontal region or centrum semiovale had severe CP. Cysts involving the periventricular white-matter in the occipital region were associated with a poor prognosis. Echolucent cystic lesions detected by ultrasound in the neonatal period accurately predict adverse outcome, and if multiple and present in the occipital region, confer a very high risk of severe CP.