Ventricular dilation following periventricular-intraventricular hemorrhage can be managed without ventriculoperitoneal shunting in most cases. Twenty-six patients who had periventricular-intraventricular hemorrhage with subsequent ventricular dilation were examined at 1 year of age for neurodevelopmental outcome and hydrocephalus. As previously reported, ventricular dilation may be divided into two groups: ventriculomegaly and posthemorrhagic hydrocephalus. Fourteen patients with ventriculomegaly were followed up with serial ultrasound observations only, and 12 patients with posthemorrhagic hydrocephalus had temporary drainage of ventricular fluid. Only three patients with posthemorrhagic hydrocephalus required ventriculoperitoneal shunting in the neonatal period. Neurodevelopmental abnormalities were found in eight infants who had posthemorrhagic hydrocephalus and two who had ventriculomegaly. Six of these infants had intraparenchymal injury demonstrated by ultrasound, five as a result of the original hemorrhage and 1 by infection. A single infant with posthemorrhagic hydrocephalus, discharged from the hospital with stable ventricular size, developed hydrocephalus and neurodevelopmental delay after the neonatal period. This reversed with ventriculoperitoneal shunting at 1 year of age. It is suggested that even in patients developing ventricular dilation following periventricular-intraventricular hemorrhage, it is the primary intraparenchymal injury that is responsible for subsequent morbidity. Thus, provided serial reevaluations are possible, an expectant management of ventricular dilation is justified.