Parenchymal involvement of intraventricular hemorrhage (IVH) is a major risk factor for neurodevelopmental handicap in very low birth weight neonates. Previous trials have suggested that indomethacin would lower the incidence and severity of IVH in very low birth weight neonates. We enrolled 431 neonates of 600- to 1250-g birth weight with no evidence for IVH at 6 to 11 hours of age in a prospective, randomized, placebo-controlled trial to test the hypothesis that low-dose indomethacin (0.1 mg/kg intravenously at 6 to 12 postnatal hours and every 24 hours for two more doses) would lower the incidence and severity of IVH. Serial cranial ultrasound examinations and echocardiographs were performed. There were no differences in the birth weight, gestational age, sex, Apgar scores, and percent of neonates treated with surfactant between the indomethacin and placebo groups. Within the first 5 days, 25 (12%) indomethacin-treated and 40 (18%) placebo-treated neonates developed IVH (P = .03, trend test). Only one indomethacin-treated patient experienced grade 4 IVH compared with 10 placebo-treated neonates (P = .01). Sixteen indomethacin-treated neonates and 29 control neonates died (P = .08); there was a difference favoring indomethacin with respect to survival time (P = .06). Eighty-six percent of all neonates had a patent ductus arteriosus on the first postnatal day; indomethacin was associated with significant ductal closure by the fifth day of life (P < .001). There were no differences in adverse events attributed to indomethacin between the two treatment groups. Low-dose prophylactic indomethacin significantly lowers the incidence and severity of IVH, particularly the severe form (grade 4 IVH). In addition, indomethacin closes the patent ductus arteriosus and is not associated with significant adverse drug events in very low birth weight neonates.