It has been argued that young children's brains are "plastic," and may sustain substantial brain insult with little loss of function. Recent research suggests that this notion may not apply for generalized cerebral pathology. The present study aimed to evaluate this proposition using a sample of 73 young children, divided into 3 groups: severe head injury (HI; N = 17); mild-moderate HI (N = 32); and noninjured controls (N = 24). Preinjury screening established equivalence across groups for age, sex, preinjury ability, behavioral adjustment, socioeconomic status, and family functioning. Children were evaluated as soon as possible postinjury, and again 12 months postinjury, in three domains: intellectual ability, language, and memory. Results indicated that severe HI was associated with substantial, persisting difficulties in all areas. In contrast, children with mild-moderate HI experienced fewer difficulties, and often performed similarly to controls, both acutely and 12 months postinjury. There was no evidence of differential recovery of function associated with injury severity, with performance increments consistent across groups and probably due to either age-appropriate developmental gains, or test-related practice effects. Poorer outcome at 12 months postinjury was predicted by injury severity primarily, with earlier age at injury, and premorbid ability associated with outcome in specific domains.