OBJECTIVE To clarify further the influence of intrauterine growth retardation (IUGR) on early neural development. METHODS In 30 small-for-gestational age (SGA) preterm infants at term, brainstem auditory-evoked responses (BAERs) were recorded with clicks of different repetition rates. All infants had a birthweight < 3rd centile, without any other major perinatal complications. RESULTS Compared with the BAER in 36 appropriate-for-gestational age (AGA) term infants, the preterm SGA infants did not show any abnormalities at 21 s(-1) clicks, except for a slight increase in wave III amplitude. At 51 s(-1) clicks, there was an increase in III-V/I-III interval ratio (ANOVA p < 0.05). At 91 s(-1), the I-III interval shortened, whereas the III-V interval and III-V/I-III interval ratio increased (all p < 0.05). Wave V amplitude tended to increase slightly at all repetition rates of clicks used, although this increase did not reach statistical significance. The III-V interval and III-V/I-III interval ratio in the preterm SGA infants at different click rates correlated inversely with occipitofrontal head circumference at the time of testing, i.e. the smaller the head the longer the III-V interval (all p < 0.01). Wave III amplitude at 21 s(-1) also correlated inversely with head circumference (p < 0.01), suggesting that the slight increase in this amplitude in the preterm SGA infants is related to their relatively small head size. CONCLUSIONS There were no major abnormalities in the BAER up to 91 s(-1) clicks at term in preterm SGA infants. The slight increase in III-V interval at high-rate stimulation suggests a subtle degree of central neural dysfunction, which is associated with small head size following IUGR.