BACKGROUND: The long-term consequences of inhaled nitric oxide (iNO) use in premature newborns with respiratory failure are unknown. We therefore studied the clinical and economic outcomes to 1 year of corrected age after a randomized controlled trial of prophylactic iNO. METHODS: Premature newborns (gestational age ≤34 w, birth weight 500-1250 g) with respiratory failure randomly received 5 ppm iNO or placebo within 48 h of birth until 21 d or extubation. We assessed clinical outcomes via in-person neurodevelopmental evaluation at 1 y corrected age and telephone interviews every 3 m. We estimated costs from detailed hospital bills and interviews, converting all costs to 2008 US$. Of 793 trial subjects, 631 (79.6%) contributed economic data, and 455 (77.1% of survivors) underwent neurodevelopmental evaluation. RESULTS: At 1 y corrected age, survival was not different by treatment arm (79.2% iNO vs. 74.5% placebo, P = .12), nor were other postdischarge outcomes. For subjects weighing 750-999 g, those receiving iNO had greater survival free from neurodevelopmental impairment (67.9% vs. 55.6%, P = .04). However, in subjects weighing 500-749 g, iNO led to greater oxygen dependency (11.7% vs. 4.0%, P = .04). Median total costs were similar ($235 800 iNO vs. $198 300 placebo, P = .19). Quality-adjusted survival was marginally better with iNO (by 0.011 quality-adjusted life-years/subject). The incremental cost-effectiveness ratio was $2.25 million/quality-adjusted life-year. CONCLUSIONS: Subjects in both arms commonly experienced neurodevelopmental and pulmonary morbidity, consuming substantial health care resources. Prophylactic iNO beginning in the first days of life did not lower costs and had a poor cost-effectiveness profile. Copyright © 2009 by the American Academy of Pediatrics.