Among children born at extremely low birthweight (ELBW: <1000 g at birth) there is an association between the presence of periventricular brain injury (PVBI) and lowered performance on tests of reading and spelling ability. The present study was designed to determine if this association might be related to underlying dysfunction in the subcortical magnocellular visual pathway or its cortical targets in the dorsal stream, a prediction motivated by the magnocellular theory of dyslexia. Thirty-five ELBW children were divided into two groups based upon the presence or absence of PVBI (no PVBI, n = 11; PVBI, n = 24). The performance of these two groups was compared to that of a group of healthy full term children (n = 12) on a motion-defined form recognition task believed to tap into the functioning of the magnocellular pathway and/or the dorsal stream. ELBW children did, in fact, show a striking impairment on this task, with 71% of the sample performing at a level more than three standard deviations below the mean of full term controls. Surprisingly, their difficulties were not found to be related to either the presence of brain injury (verified by neonatal cranial ultrasound) or to problems with reading or spelling. An association was documented, however, between difficulties with motion processing and performance on several subtests of the Performance IQ scale of the Wechsler Intelligence Scale for Children–Third Edition. This latter finding is consistent with our earlier suggestion that magnocellular pathway/dorsal stream dysfunction may underlie problems with visuospatial and visuomotor performance in this population. (JINS, 2003, 9, 440–449.)