ImportanceNeurological manifestations during acute SARS-CoV-2–related multisystem inflammatory syndrome in children (MIS-C) are common in hospitalized patients younger than 18 years and may increase risk of new neurocognitive or functional morbidity.ObjectiveTo assess the association of severe neurological manifestations during a SARS-CoV-2–related hospital admission with new neurocognitive or functional morbidities at discharge.Design, Setting, and ParticipantsThis prospective cohort study from 46 centers in 10 countries included patients younger than 18 years who were hospitalized for acute SARS-CoV-2 or MIS-C between January 2, 2020, and July 31, 2021.ExposureSevere neurological manifestations, which included acute encephalopathy, seizures or status epilepticus, meningitis or encephalitis, sympathetic storming or dysautonomia, cardiac arrest, coma, delirium, and stroke.Main Outcomes and MeasuresThe primary outcome was new neurocognitive (based on the Pediatric Cerebral Performance Category scale) and/or functional (based on the Functional Status Scale) morbidity at hospital discharge. Multivariable logistic regression analyses were performed to examine the association of severe neurological manifestations with new morbidity in each SARS-CoV-2–related condition.ResultsOverall, 3568 patients younger than 18 years (median age, 8 years [IQR, 1-14 years]; 54.3% male) were included in this study. Most (2980 [83.5%]) had acute SARS-CoV-2; the remainder (588 [16.5%]) had MIS-C. Among the patients with acute SARS-CoV-2, 536 (18.0%) had a severe neurological manifestation during hospitalization, as did 146 patients with MIS-C (24.8%). Among survivors with acute SARS-CoV-2, those with severe neurological manifestations were more likely to have new neurocognitive or functional morbidity at hospital discharge compared with those without severe neurological manifestations (27.7% [n = 142] vs 14.6% [n = 356]; P < .001). For survivors with MIS-C, 28.0% (n = 39) with severe neurological manifestations had new neurocognitive and/or functional morbidity at hospital discharge compared with 15.5% (n = 68) of those without severe neurological manifestations (P = .002). When adjusting for risk factors in those with severe neurological manifestations, both patients with acute SARS-CoV-2 (odds ratio, 1.85 [95% CI, 1.27-2.70]; P = .001) and those with MIS-C (odds ratio, 2.18 [95% CI, 1.22-3.89]; P = .009) had higher odds of having new neurocognitive and/or functional morbidity at hospital discharge.Conclusions and RelevanceThe results of this study suggest that children and adolescents with acute SARS-CoV-2 or MIS-C and severe neurological manifestations may be at high risk for long-term impairment and may benefit from screening and early intervention to assist recovery.