Studies with animals have shown that in utero exposure to cocaine interferes with fetal brain development by disrupting the processes of neuronal proliferation, differentiation, and migration, often leading to subsequent neurobehavioral deficits. However, studies with humans have produced inconsistent findings. Although neurobehavioral abnormalities have been observed among cocaine-exposed infants in several studies and in some cases dose-response effects have been found, the specific neurobehaviors affected vary from one study to the next. Researchers studying the effects of fetal cocaine-exposure are faced with many difficult challenges. For example, women who use cocaine typically use other substances in addition to cocaine, many of the methods available for identifying cocaine-exposed neonates are not reliable, and the available methods for assessing cocaine-exposed newborns may not be sufficiently sensitive to detect the subtle effects of cocaine on the developing central nervous system. Despite these difficulties, there is a growing body of research that suggests that fetal cocaine exposure is associated with subsequent language deficits among children exposed in utero. However, it is virtually impossible to disentangle the effects of the impoverished environments in which these children are often raised from the effect, if any, of fetal cocaine exposure. To determine the effects of fetal cocaine exposure independent of postnatal environmental effects, cocaine-exposed neonates would ideally be tested within the first few weeks of birth, and to identify early risks for subsequent language delay, well-researched auditory information processing measures could be used. The purpose of the present study was to assess the effects of fetal cocaine exposure on neonatal auditory information processing ability. To overcome limitations of some previous studies on the neuroteratogenic effects of cocaine, such as unreliable subject identification techniques, inadequate control over confounding variables, and questionable measures of central nervous system integrity, a valid measure of auditory information processing was used in a rigorous, case-control design. Newborn information processing was assessed using habituation and recovery of head-turning toward an auditory stimulus across the 3 phases of the procedure: familiarization, novelty, and dishabituation. During the familiarization phase, the infant orients and habituates to a repeated word; during the novelty phase, the infant recovers head-turning to a novel word and subsequently habituates to this word; and during the dishabituation phase the infant displays renewed head-turning to the return of the original stimulus. Testing takes approximately 20 minutes. This procedure has been shown previously to discriminate among infants at high-, moderate-, and low-risk for subsequent developmental delay. Twenty-five cocaine-exposed and 25 nonexposed control neonates, identified by meconium analysis, urine analysis, and/or maternal self-report, were tested on the auditory information processing procedure. The majority of infants were tested within the first few days of birth. Cocaine-exposed and control neonates were matched on birth weight, gestational age, Apgar scores, age at testing, and socioeconomic status as reflected by household income. Mothers were matched on age, weight gain, cigarette smoking, and alcohol consumption. Fetal cocaine exposure was associated with impaired auditory information processing. Both cocaine-exposed and nonexposed control neonates oriented to the familiarization stimulus, but cocaine-exposed neonates displayed impaired habituation. Moreover, cocaine-exposed neonates did not recover or habituate to the novel stimulus or dishabituate to the return of the familiarization stimulus. (ABSTRACT TRUNCATED)