OBJECTIVES: To determine the incidence of neonatal dehydration leading to rehospitalization, whether clinical and health services data could predict its occurrence, and the outcome of dehydrated infants. METHODS: We employed a retrospective case-control design nested within a cohort of 51 383 newborns weighing 2000 g or more, with a gestational age of 36 weeks or more born at 11 Kaiser Permanente hospitals during 1995 and 1996. Cases were 110 infants who were rehospitalized within 15 days of discharge with dehydration, and who either had 12% or greater weight loss or a serum sodium level of 150 mEq/L or greater. Controls were 402 randomly selected infants. We reviewed subjects’ paper medical records and telephoned their families at 24 to 36 months of age to ascertain neurological outcomes. RESULTS: Rehospitalization for dehydration occurred in 2.1 per 1000 live births (95% confidence interval [CI], 1.8-2.6). Among vaginal births, the most important risk factors were being born of a first-time mother (adjusted odds ratio [AOR], 5.5; 95% CI, 3.1-9.6); exclusive breastfeeding (AOR, 11.2; 95% CI, 3.9-32.6); maternal age equal to or older than 35 years (AOR, 3.0; 95% CI, 1.5-6.0); and gestational age younger than 39 weeks (AOR, 2.0, 95% CI, 1.2-3.5). Among cesarean births, having a birth hospitalization length of stay less than 48 hours was associated with dehydration (odds ratio [OR], 14.8; 95% CI, 1.4-154.1). Adherence to the American Academy of Pediatrics follow-up guideline did not decrease risk of readmission. Among surviving infants, 1 of 110 cases and 12 of 400 controls had evidence of possible neurological problems 24 to 36 months after discharge (P =.3). No cases of limb gangrene, amputation, or intracranial infarction occurred. CONCLUSIONS: In this population with good access to medical care, serious sequelae of neonatal dehydration are rare. Interventions to decrease the frequency of neonatal dehydration should focus on first-time mothers and those who breastfeed exclusively.