The impact of 2 environmental and 2 biological risk measures was studied in 175 preterm children. Levels of family risk, which included family composition, support, and interaction variables, and social class, as well as increases or decreases in family risk over the 1st year of life, were examined with intraventricular hemorrhage (IVH) and other neonatal medical complications as predictors of cognitive and motor outcomes in the 2nd year of life. Family risk, early medical risk, and the Family Risk X IVH interaction emerged as significant predictors of later development. Family risk had less impact on subjects at highest medical risk. Different regression equations for each outcome underscored the specificity of environmental effects on developmental outcomes.The environmental context in which a child is raised has long been recognized as crucial to determining developmental outcome in any number of domains. Wachs (1991) has enumerated three historical stages of research on the impact of the environment on development. In the earliest stage, studies determined that variability in the environment was related to variability in development. The environment was characterized by global, social address variables, such as socioeconomic status (SES), which do not affect the child directly. In the second stage, studies characterized by an exploration of the relation between more specific environmental variables, such as parental responsivity and variety of stimulation, and developmental outcome were examined (Lewis & Goldberg, 1969). In the third stage, the most recent research addressed the importance of organismenvironment interactions in understanding the complex relation between environmental, individual characteristics and development.Early studies found SES to be strongly related to developmental outcomes in normal and high-risk samples (