A prospective study was conducted to determine risk factors for fungal colonization, drug susceptibility, and association with invasive fungal infections (IFIs) in a neonatal unit. On admission and weekly thereafter, surveillance fungal cultures were taken from mouth, rectum, and trachea of neonates with expected stays of > 1 week. Fungal colonization was detected in 72 (12.1%) of 593 neonates during 12 months. CANDIDA ALBICANS was isolated from 42% of colonized neonates. Although early colonization (age 1.3 +/- 0.2 days) was found in 2.5% of the neonates, late colonization (age 17.6 +/- 1.4 days) was noted in 14.2% of neonates hospitalized for > 5 days. Neonates born vaginally were at higher risk for early colonization than those delivered after cesarean section ( P = 0.01). By multivariate logistic regression, very low birthweight was the only independent risk factor for late colonization. Ten IFIs (nine candidemias) were diagnosed, yielding a rate of 1.1%. These episodes occurred in 6.9% of colonized neonates, compared with 0.76% of noncolonized neonates ( P = 0.002). C. ALBICANS was susceptible to azoles, but some non- ALBICANS CANDIDA spp. exhibited decreased susceptibility to these drugs.