Objective: Iron has been implicated in the pathogenesis of brain injury and hydrocephalus after preterm germinal matrix hemorrhage-intraventricular hemorrhage, however, it is unknown how external or endogenous intraventricular clearance of iron pathway proteins affect the outcome in this group. Methods: This prospective multicenter cohort included patients with posthemorrhagic hydrocephalus (PHH) who underwent (1) temporary and permanent cerebrospinal fluid (CSF) diversion and (2) Bayley Scales of Infant Development-III testing around 2 years of age. CSF proteins in the iron handling pathway were analyzed longitudinally and compared to ventricle size and neurodevelopmental outcomes. Results: Thirty-seven patients met inclusion criteria with a median estimated gestational age at birth of 25 weeks; 65% were boys. Ventricular CSF levels of hemoglobin, iron, total bilirubin, and ferritin decreased between temporary and permanent CSF diversion with no change in CSF levels of ceruloplasmin, transferrin, haptoglobin, and hepcidin. There was an increase in CSF hemopexin during this interval. Larger ventricle size at permanent CSF diversion was associated with elevated CSF ferritin (p = 0.015) and decreased CSF hemopexin (p = 0.007). CSF levels of proteins at temporary CSF diversion were not associated with outcome, however, higher CSF transferrin at permanent CSF diversion was associated with improved cognitive outcome (p = 0.015). Importantly, longitudinal change in CSF iron pathway proteins, ferritin (decrease), and transferrin (increase) were associated with improved cognitive (p = 0.04) and motor (p = 0.03) scores and improved cognitive (p = 0.04), language (p = 0.035), and motor (p = 0.008) scores, respectively. Interpretation: Longitudinal changes in CSF transferrin (increase) and ferritin (decrease) are associated with improved neurodevelopmental outcomes in neonatal PHH, with implications for understanding the pathogenesis of poor outcomes in PHH. ANN NEUROL 2021;90:217–226.