The natural history, medical management, and outcome in infants with progressive posthemorrhagic hydrocephalus after intraventricular hemorrhage were studied prospectively. Infants with asymptomatic severe posthemorrhagic hydrocephalus were managed with a predetermined protocol. Outcome between groups at 1 to 2 years and at more than 3 years was compared. The natural history study, restricted to the inborn population, revealed that posthemorrhagic hydrocephalus developed in 53 of 409 infants with intraventricular hemorrhage. The progression of hydrocephalus either was arrested or regressed in 35 of 53 infants; progression to severe hydrocephalus occurred in 18 of 53 infants. The severe posthemorrhagic hydrocephalus was asymptomatic in 16 of 18 infants. The management and outcome study included both inborn and outborn infants. Of 50 infants, 12 had symptomatic severe hydrocephalus and 38 had asymptomatic severe hydrocephalus. The 16 infants managed with close observation were as likely to remain shunt free as the 22 infants managed with serial lumbar punctures. Of 38 infants, 20 were managed without shunts. At 3 to 6 years, the outcome of infants in the close observation group did not differ from that in the lumbar puncture group. Long-term outcome of infants with progression to asymptomatic severe hydrocephalus did not differ from that of infants in whom disease progression was arrested. Poor outcome in infants with intraventricular hemorrhage and subsequent posthemorrhagic hydrocephalus was related to severity of hemorrhage and gestational age at birth less than 30 weeks. Because long-term outcome of infants with severe hydrocephalus did not differ from that of infants in whom the progression of hydrocephalus was arrested or whose condition improved before hydrocephalus became severe, we currently attempt medical management of these infants.