The accuracy of electroencephalogram (EEG) source localization is compromised because of head modelling errors. In this study, we investigated the effect of inaccuracy in the conductivity of head tissues and head model structural deficiencies on the accuracy of EEG source analysis in premature neonates. A series of EEG forward and inverse simulations was performed by introducing structural deficiencies into the reference head models to generate test models, which were then used to investigate head modelling errors caused by cerebrospinal fluid (CSF) exclusion, lack of grey matter (GM)-white matter (WM) distinction, fontanel exclusion and inaccuracy in skull conductivity. The modelling errors were computed between forward and inverse solutions obtained using the reference and test models generated for each deficiency. Our results showed that the exclusion of CSF from the head model had a strong widespread effect on the accuracy of the EEG source localization with position errors lower than 4.17 mm. The GM and WM distinction also caused strong localization errors (up to 3.5mm). The exclusion of fontanels from the head model also strongly affected the accuracy of the EEG source localization for sources located beneath the fontanels with a maximum localization error of 4.37 mm. Similarly, inaccuracies in the skull conductivity caused errors in EEG forward and inverse modelling in sources beneath cranial bones. Our results indicate that the accuracy of EEG source imaging in premature neonates can be largely improved by using head models, which include not only the brain, skull and scalp but also the CSF, GM, WM and fontanels.