Clinical studies suggest that growth-retarded prematurely delivered infants are neurologically precocious. We investigated this paradoxical observation in the fetal lamb. Somatosensory and brainstem auditory-evoked potentials were studied in chronically instrumented fetal lambs in late gestation with varying degrees of growth retardation induced by preconception uterine carunclectomy. The components of the brainstem auditory-evoked response appeared earlier (p less than 0.05) in fetuses at least 2 SD less than the mean weight for gestational age (n = 5) compared to normal controls (n = 8) or carunclectomized fetuses of normal size (n = 7). Several waveforms of both the somatosensory (N20, P/N 30, and P200) and the brainstem auditory-evoked response (I, III, IV, and V) demonstrated shorter (p less than 0.05) latencies in growth-retarded fetuses relative to normal-sized fetuses. The ability to follow increasing stimulus rates for both stimuli also demonstrated precocial maturation (p less than 0.05) in growth-retarded as compared to normal-sized fetuses. Growth retardation is thus associated with precocial neurologic maturation in utero.