Ventilator dependent preterm infants are often treated with dexamethasone(DEX) to decrease the risk and severity of chronic lung disease. To study the effects of DEX on developmental outcome we examined, at one year of age, infants who had participated in a randomized placebo-controlled double-blind trial of a 42-day tapering course of DEX. The dosage schedule was that described previously by Cummings et al [NEJM 1989;320:1505-1510]. Of 118 infants randomized, 50 of 57 DEX recipients and 45 of 61 placebo recipients survived to one year of age (adjusted for prematurity). Of these 95 survivors, 91 (96%) were examined at one year by clinicians blind to group assignment. A structured physical and neurologic examination was performed by a pediatrician experienced in developmental follow-up, and the Bayley Scales of Infant Development were administered by a child psychologist. Groups were similar in terms of birth weight (expressed as median and range) [DEX: 747 gms(420-1362); placebo: 775 gms (495-1324)], gestational age [DEX: 25 wks(23-29); placebo: 26 wks (23-31)], gender [DEX: 48% males; placebo 51% males], race [DEX: 66% white, placebo: 51% white]. A higher percentage of DEX infants had major cranial ultrasound abnormality [21% vs 11%]. Group differences were not found for Bayley Mental Developmental Index (MDI) or Pschyomotor Developmental Index (PDI): [MDI: DEX - 94 (50-123) vs placebo - 90 (28-117); PDI: DEX - 78 (50-109) vs placebo - 81 (28-117)]. More DEX treated infants had cerebral palsy [DEX: 12/47 (26%) vs 3/44 (7%); p = 0.02; Fisher's exact test], and abnormal neurological examinations [DEX: 21/47 (45%) vs placebo 7/44(16%); p =0.003; Fisher's exact test]. In stratified analyses which adjusted for major cranial ultrasound abnormalities, the association between DEX and cerebral palsy persisted [odds ratio: 5.8; 95% confidence limits: 0.9, 35.4; p= 0.057] Possible explanations for these findings include an adverse effect of DEX on brain developmental and/or improved survival of infants who either already have neurologic damage or who are at increased risk for such damage.