In order to determine the dual effects of IUGR and premature birth, a prospective study of growth and development was done in a group of preterm small-for-gestational age infants (SGA). All were ≤ 32 weeks gestation with hirth weights more than 2 standard deviations below the mean for gestation. During 1974, 60 infants meeting these criteria were referred to our neonatal intensive care unit. Twenty-six of the 29 survivors were followed to age 18 months post-term. Mean birth weight was 988±152 g, gestation 30.5±1.7 weeks. Each infant was randomly paired with a surviving infant of appropriate weight for gestation (AGA) who matched for birth weight, sex, and type of ventilatory support (birth weight 999±129 g, gestation 27.8±1.5 weeks). The SGA infants were significantly smaller at 18 months post-term than the AGA controls with a mean difference in weight of 0.8 kg, length 2.2 cm, head circumference 1.3 cm (p<0.005). Eight of the 26 SGA children had major neurological defects: 1 with microcephaly, 2-hydrocephaly, 4-cerebral palsy, 1-seizure disorder. None of the controls were so affected (p<0.005). The Bayley developmental indices (corrected for gestation) were significantly lower than those of the controls: mental 88±15, mean difference 10 (p<0.02); motor 79±21, mean difference 11 (p<0.05). The results suggest that the complication of IUGR significantly increases the risk of serious sequelae in the tiny premature Infants.