The objectives of this study were to determine, in neonates of < 1250 g birthweight (N = 57), the initial time of skin colonization by Malassezia furfur, rate of colonization by Candida spp., and whether skin colonization by these yeasts was predictive of central line colonization or fungaemia. By age two weeks, 51% of neonates were culture-positive for M. furfur on umbilical or groin skin. During hospitalization, positive skin cultures for M. furfur or Candida spp. were obtained in 70% and 37% of neonates, respectively. Risk factors associated with positive skin cultures were mechanical ventilation and three or more episodes of suspected sepsis. Eight of the 52 infants with central venous catheters, had positive blood cultures withdrawn from the lines; five (62%) of these had positive skin surveillance cultures. Although positive skin cultures for M. furfur, Candida spp., or both were commonly observed in this population, they were not predictive of positive central line cultures or systemic illness.