&NA;Five children with ventricular dilatation (4 boys, 1 girl) had features seen on computer tomographic scan that were consistent with suprasellar arachnoid cysts. All children were investigated with a CT ventriculogram and/or CT cisternogram, and no communication with the cyst was demonstrated. Three children were seen in the 1st year of life and the remaining 2 children were between 1 and 5 years of age. Hydrocephalus and developmental delay were the most common presenting features, followed by visual disturbance, squint, or ataxia. Direct surgical decompression was performed in all 5 patients to avoid long‐term placement of a ventriculoperitoneal shunt. A temporary shunt was placed in 2 children because of high intracranial pressure. Direct partial excision of the cyst wall to allow long‐term drainage into the basal cisterns or ventricular system was successful in all children. The presence of subdural collections postoperatively required temporary shunting in 2 children. After follow‐up for between 10 and 22 months no clinical endocrinological sequelae have been detected, but 2 children have raised serum prolactin levels. Three children are developmentally delayed; one of these has regained some skills since surgery. Direct surgical decompression of suprasellar arachnoid cysts to avoid long‐term shunt placement is the preferred method of surgical treatment for this condition. (Neurosurgery25:554‐561, 1989)