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Preterm birth is associated with an increased risk of developmental difficulties. Magnetic resonance imaging (MRI) is increasingly being used to identify damage to the brain following preterm birth. It is hoped this information will aid prognostication and identify neonates who would benefit from early therapeutic intervention. Cystic periventricular white matter damage has traditionally been associated with abnormal motor developmental and cerebral palsy, but its presence on MRI does not preclude normal cognitive development. This has led to increasing interest in the identification of diffuse periventricular white matter damage with conventional and sophisticated MRI. However, the correlation between these appearances and developmental outcome remains unclear. Measurements of the size, volumes, and growth rates of many regions of the brain, such as the corpus callosum, ventricular system, cortex, deep grey matter, and cerebellum, are all also altered following preterm birth, but there is insufficient evidence to use this data in the clinical setting. This article is a review of the current evidence on MRI and developmental outcome, suggesting possible indications for the use of MRI following preterm birth.