OBJECTIVE: Children born very preterm are reported to have an increased frequency of social, emotional, and behavioral problems at school age compared with their peers born at term. The primary aim of this study was to compare social-emotional difficulties and competencies of very preterm and full-term children at 2 years' corrected age. In addition, the relation between perinatal variables and early behavior problems was also examined to help identify those very preterm children most at risk. METHOD: At 2 years' corrected age, the parents of 188 very preterm (gestational age <30 weeks or birth weight <1,250 g) and 70 full-term (gestational age >or=37 weeks) children completed the Infant Toddler Social and Emotional Assessment to determine externalizing, internalizing, and dysregulation problems and social-emotional competencies. For the very preterm sample, extensive perinatal data were collected including sex, birth weight, gestational age, chronic lung disease, and postnatal steroids, as well as neonatal cerebral white matter abnormalities detected by magnetic resonance imaging. RESULTS: The very preterm children at 2 years demonstrated significantly higher internalizing and dysregulation scores and lower competence scores than peers born at term. There was no significant difference in externalizing scores between groups. Female sex, lower birth weight z score, white matter abnormalities, and postnatal corticosteroids were significantly associated with lower competence scores in the very preterm group. CONCLUSIONS: Very preterm children exhibit higher rates of behavior problems early in development, in particular internalizing and dysregulation problems and poorer competence.