Seventy preterm babies who were born with a birthweight <1500 g were studied with brainstem auditory evoked responses (BAER) at 37‐42 wk of postconceptional age. The data were compared with those of normal term neonates to determine the prevalence of hearing impairment in preterm very low birthweight (VLBW) babies when they reached term. The BAER was recorded with click stimuli at 21 s−1. Wave I and V latencies increased significantly (ANOVA p < 0.01 and 0.001). I‐V and III‐V intervals also increased significantly (p < 0.05 and 0.001). Wave V amplitude and V/I amplitude ratio did not differ significantly from those in the normal term controls. Ten of the 70 VLBW babies had a significant elevation in BAER threshold (>30 dB normal hearing level). Eleven had an increase in I‐V interval (>2.5 SD above the mean in the normal controls) and one had a decrease in V/I amplitude ratio (<0.45). These results suggest that 14% (10/70) of the VLBW babies had a peripheral hearing impairment and 17% (12/70) a central impairment. Three babies had both an increase in I‐V interval and an elevation in BAER threshold, suggesting that 4% (3/70) had both peripheral and central impairments. Thus, the total prevalence of hearing impairment was 27% (19/70). Conclusion: About one in four preterm VLBW babies has peripheral and/or central hearing impairment at term. VLBW and its associated unfavourable perinatal factors predispose the babies to hearing impairment.