Our aim was to assess brain myo-inositol/creatine plus phosphocreatine (Cr) in the first week in term infants with neonatal encephalopathy using localized short echo time proton magnetic resonance spectroscopy and to relate this to measures of brain injury, specifically lactate/Cr in the first week, basal ganglia changes on magnetic resonance imaging (MRI), and neurodevelopmental outcome at 1 y. Fourteen term infants with neonatal encephalopathy of gestational age (mean +/- SD) 39.6 +/- 1.6 wk, birth weight 3270 +/- 490 g, underwent MRI and magnetic resonance spectroscopy at 3.5 +/- 2.1 d. Five infants were entered in a pilot study of treatment with moderate whole-body hypothermia for neonatal encephalopathy; two were being cooled at the time of the scan. T(1)- and T(2)-weighted transverse magnetic resonance images were graded as normal or abnormal according to the presence or absence of the normal signal intensity of the posterior limb of the internal capsule and signal intensity changes in the basal ganglia. Localized proton magnetic resonance spectroscopy data were obtained from an 8-cm(3) voxel in the basal ganglia using echo times of 40 and 270 ms, and the peak area ratios of myo-inositol/Cr and lactate/Cr were measured. Outcome was scored using Griffith's development scales and neurodevelopmental examination at 1 y. MRI and outcome were normal in six infants and abnormal in eight. myo-Inositol/Cr and lactate/Cr were higher in infants with abnormal MRI and outcome (p < 0.01, p < 0.01, respectively). myo-Inositol/Cr and lactate/Cr were correlated (p < 0.01) and were both correlated to the Griffith's developmental scales (p < 0.01, p < 0.01, respectively). In conclusion, these preliminary data suggest that early increases in brain basal ganglia myo-inositol/Cr in infants with neonatal encephalopathy are associated with increased lactate/Cr, MRI changes of severe injury, and a poor neurodevelopmental outcome at 1 y.