Babies admitted to a neonatal intensive care unit in whom acute renal failure developed were studied prospectively to determine the etiology, course, and outcome of the disorder, as well as the reliability of renal indices in distinguishing intrinsic from prerenal renal failure. The incidence of neonatal acute renal failure was 3.6% (22/603). The most frequent causes were hypotension (86%), respiratory distress syndrome (41%), sepsis (32%), and asphyxia (27%). Half of the patients were born at less than 32 weeks' gestation and had a birth weight of less than 1500 gm. There was intrinsic renal failure in 15 neonates and prerenal failure in seven. Renal indices (urine-to-plasma ratio of osmolality, fractional excretion of sodium, and renal failure index) were not reliable in differentiating between intrinsic or prerenal failure. Mortality from renal failure was high at 77%. Survivors of neonatal acute renal failure who had no underlying congenital anomalies of the urinary tract did not appear to exhibit residual renal impairment during follow-up evaluation. It is important to identify those clinical indices that can be used in determining the diagnosis and prognosis of acute renal failure in neonates, particularly in very premature, low-birth-weight babies.