The outcome in 198 surviving very-low-birth-weight (less than 1501 gm) infants with and without cerebral intraventricular hemorrhage was compared to determine whether CVH is associated with early childhood developmental or neuromotor handicaps. Major handicaps were noted in 10% of the infants without and 28% of the infants with CVH. Among the infants with CVH, a major handicap was present in 9% with grade 1, 11% with grade 2, 36% with grade 3, and 76% with grade 4 CVH. Infants with posthemorrhagic hydrocephalus had the same incidence of major handicaps (59%) as did comparable infants with no hydrocephalus (57%). Our data indicate that grades 1 and 2 CVH do not increase an infant's risk for major handicaps, and there is a direct relationship of grades 3 and 4 CVH and major handicaps.