Thirty-eight VLBW infants were evaluated in terms of achievement of 5 milestones by 40 weeks post-conceptual age (PCA). These were the ability 1)to breathe without assistance, 2)to breathe room air, 3)to take total oral feedings, 4)to be free of apnea and/or bradycardia, and 5)to maintain stable body temperature in an open crib. Developmental performance was evaluated at 13 to 41 mos. using the Bayley Scales (MDI) or the McCarthy Scales (GCI). A significant difference with respect to outcome (p<.01) was found for patients achieving all milestones (Group A) versus those attaining 4 or fewer (Group B).The presence of & grade of IVH was also significantly related to outcome (p<.002). Significance was retained for both milestones (p<.05) & IVH(p<.01) when regressed together on outcome, but IVH did not affect milestone attainment(p<.25). When considering grade of IVH, SES, birth wt. & milestone attainment simultaneously, IVH became the single factor significantly related to outcome (p<.005). Thus, although there is a significant relationship between milestone achievement at 40 wks PCA & outcome, severity of IVH has the most significant association with performance.