To examine the impact of renal transplantation on subsequent development of children with chronic renal failure, 37 children undergoing primary renal transplantation at or before 30 months of age whose allograft functioned for at least 1 year were prospectively studied. Psychometric tests were performed an average of 4 months before transplantation; reevaluation was done an average of 14 months after surgery. Comparison of individual pretransplantation and posttransplantation mental development scores in 33 patients, assessed by either Bayley Mental Development Index or Stanford-Binet Intelligence Quotient, revealed an average increase of 12.6 (P less than .001). After transplantation, there was a significant improvement in mental performance in 12 of 18 patients (P less than .02) from the range of mild delay (Mental Development Index or Stanford-Binet IQ score = 50 to 69) to the range of normal mental development (greater than or equal to 70). The Bayley Psychomotor Development Index scores were frequently lower than Mental Development Index scores and also increased an average of 14.4 (P less than .01) after transplantation in all 12 patients with paired data. Significant individual improvement in occipital-frontal circumference standard deviation score (P less than .001) was noted in 24 children after transplantation. It is concluded that successful renal transplantation in young children with chronic renal failure is often associated with significant improvements in cognitive and psychomotor function, as well as improved cephalic growth.