This work examines the long-term effects of premature birth on children's neurodevelopment and psychosocial functioning to determine the role corticosteroid treatments play in influencing this development. 155 children who were born very prematurely, (31 weeks gestation or less) were comprehensively assessed. Results were analysed in terms of whether or not steroid treatments were received after birth. In order to control for genetic influences, 25 nearest-age siblings were also assessed in addition to aspects of environment and parenting style. Factors relating to family functioning, parental mental health and demographic variables were considered. The main outcome measures were cognitive ability, behavioural competencies and behavioural difficulties. There were significant group differences indicating that steroids impact on long-term outcomes. Environmental factors were also strongly predictive of outcomes. It was concluded that postnatal steroid administration has an impact upon development which has been overlooked in much of the literature, however, environmental factors such as family functioning appear to have a key role in these children's development.