The incidence of periventricular-intraventricular hemorrhage (PV-IVH) in a group of 460 preterm infants with birth weight less than 2,250 gm, studied by cranial ultrasonography, was 39%. Sixty-four (36%) of the infants with periventricular-intraventricular hemorrhage had, in addition, periventricular intraparenchymal echodensity (IPE) evident on ultrasound scan. Thirty-three of the 64 infants had large IPE, and 31 had small IPE. Large IPE consisted of globular echodensity, most often on the side of maximum intraventricular hemorrhage, extending from the external angle of the lateral ventricle into major portions of the white matter of the frontal and parietal lobes; small IPE, often bilateral, consisted of linear echodensity extending for a few millimeters from the external angle of the lateral ventricle into the periventricular white matter. The outcome for infants with large and small IPE differed markedly. Mortality was greatest (94%) for infants with large IPE and birth weight less than 1,000 gm. All survivors with large IPE, regardless of birth weight, had moderate to severe neurological deficits evident on follow-up. In contrast, infants with small IPE and birth weight less than 1,000 gm had a mortality of 38%. Moreover, 70% of all survivors with small IPE were free of neurological deficits on follow-up. The difference in outcome appeared to relate in largest part to the severity of the parenchymal involvement. These data have major significance for decisions concerning management of infants with periventricular-intraventricular hemorrhage and intraparenchymal involvement.