Children with neonatal encephalopathy (NE) are at risk for basal ganglia/thalamus (BG/T) and watershed patterns of brain injury. Children with BG/T injury are at high risk for motor impairment in infancy, but the predictive validity of a published rating scale for outcome at age four years is not known. We examined a cohort of children with NE and magnetic resonance imaging (MRI) to examine the relationship between BG/T injury and severity of cerebral palsy (CP) in childhood. Term-born neonates at risk for brain injury due to NE were enrolled from 1993 to 2014 and received MRI within two weeks of birth. Brain injury was scored by a pediatric neuroradiologist. The Gross Motor Function Classification System (GMFCS) level was determined at four years. The relationship between BG/T injury and dichotomized GMFCS (no CP or GMFCS I to II = none/mild versus III to V = moderate/severe CP) was evaluated with logistic regression, and predictive performance was assessed by cross-validated area under the receiver operating characteristic curve (AUROC). Among 174 children, higher BG/T scores were associated with more severe GMFCS level. Clinical predictors had a low AUROC (0.599), compared with that of MRI (0.895). Risk of moderate to severe CP was low (<20%) in all patterns of brain injury except BG/T = 4, which carried a 67% probability (95% confidence interval 36% to 98%) of moderate to severe CP. The BG/T injury score can be used to predict the risk and severity of CP at age four years and thereby inform early developmental interventions. [ABSTRACT FROM AUTHOR]