Free bilirubin concentration, bilirubin-binding capacity, and bilirubin-binding affinity were determined by peroxidase oxidation in 66 newborn infants. Twelve healthy term infants whose unconjugated bilirubin concentration was 15.8 +/- 3.7 mg/dl (mean +/- SD) had a binding capacity of 31.9 +/- 3.7 mg/dl (bilirubin: albumin molar ratio = 0.89 +/- 0.07) and Ka = 28 +/- 11 x 10(7)/M. Twelve term infants with clinical complications of asphyxia, acidosis, respiratory distress, or sepsis, and 17 preterm infants with no complications had lower serum albumin concentrations and slightly reduced binding capacity and affinity compared to the healthy term infants. Free bilirubin concentrations were similar in these three groups, averaging 8 to 9 nmol/l in each group. Twenty-five preterm infants with complications had significantly higher free bilirubin (19 +/- 11 nmol/l), lower binding capacity, and lower binding affinity than any of the other three groups (P less than 0.01 for all comparisons). Five of the 25 sick preterm infants had kernicterus at autopsy. These five infants were similar to the other 20 in birth weight, gestational age, serum bilirubin, and serum albumin level, but had significantly higher free bilirubin and significantly lower binding capacity and affinity. The data suggest that serious neonatal illness is associated with a marked reduction in bilirubin-binding capacity and affinity and an increased risk of kernicterus in preterm infants. The mechanism by which neonatal morbidity decreases bilirubin binding is not known.