During a two-year period, subependymal pseudocysts were diagnosed in 24 infants using cranial ultrasound: 8 were located at the external angle of the lateral ventricle and 16 at the caudothalamic notch. Associated congenital anomalies were present in six infants and CMV was isolated in one case. Four of the eight infants with pseudocysts at the external angle were one half of twins. As all but one of the surviving infants with pseudocysts were normal at follow-up (at 3-24 months of age), it is important to make a distinction between pseudocysts and extensive cystic periventricular leukomalacia, as the latter condition invariably leads to cerebral palsy and/or visual impairment.