Intrauterine growth restriction (IUGR), which is already known to be a risk factor for pathological intrauterine development, perinatal mortality, and morbidity, is now also assumed to cause both physical and cognitive alterations in later child development. In the current study, effects of IUGR on infantile brain function were investigated during the fetal period and in a follow-up developmental assessment during early childhood. During the fetal period, visual and auditory event-related responses (VER and AER) were recorded using fetal magnetoencephalography (fMEG). VER latencies were analyzed in 73 fetuses (14 IUGR fetuses) while AER latencies were analyzed in 66 fetuses (11 IUGR fetuses). Bayley Scales of Infant Development, Second Edition (BSID-II) were used to assess the developmental status of the infants at the age of 24 months. The Mental Development Index (MDI) was available from 66 children (8 IUGR fetuses) and the Psychomotor Development Index (PDI) from 63 children (7 IUGR fetuses). Latencies to visual stimulation were more delayed in IUGR than in small for gestational age (SGA) or appropriate for gestational age (AGA) fetuses, albeit not to any significant extent ( = 0.282). The MDI in former IUGR infants was significantly lower ( = 0.044) than in former SGA and AGA infants. However, IUGR had no impact on PDI ( = 0.213). These findings support the hypothesis that IUGR may constitute a risk factor for neurodevelopmental delay. Further investigation of the possible underlying mechanisms, as well as continued long-term developmental research, is therefore necessary.