A prospective observational study was performed in pregnant women with known thyroid disease. We studied the effect of maternal thyroid function in the first half of pregnancy on the neurologic development of the infant in the first 2 y of life. Clinical and thyroid function data were collected from 20 pregnant women with known thyroid disease and their newborn children. Infants were divided into three groups according to their maternal thyroid function within the first half of pregnancy: Group A (n = 7): maternal subclinical hypothyroidism, Group B (n = 6): maternal euthyroidism, and Group C (n = 7): maternal hyperthyroidism or subclinical hyperthyroidism. Neurophysiologic, i.e. motor nerve conduction velocity and somatosensory evoked potentials and neurologic and developmental (Bayley scales) assessments were done. One infant, born to a mother with Graves' disease, developed transient hyperthyroidism. At the age of 6 and 12 mo, the mean mental developmental index (MDI) score was 16 points lower for infants in Group A than for those in Group B (p = 0.03 and 0.02, respectively). At the age of 24 mo, the mean MDI score was 6 points lower, which was not statistically significant. Neurophysiologic and neurologic assessments and the mean Psychomotor Developmental scores did not differ among the three groups. In conclusion, maternal subclinical hypothyroidism in the first half of pregnancy was associated with a lower mean MDI score in their infants during the first year of life.