BACKGROUND: Complications due to prematurity are a threat to child survival and full developmental potential particularly in low-income settings. OBJECTIVE: The aim of the study was to determine the neurodevelopmental outcomes among preterm infants and identify any modifiable factors associated with neurodevelopmental disability (NDD). METHODS: We recruited 454 babies (242 preterms with birth weight <2.5 kg, and 212 term babies) in a cohort study at birth from Iganga hospital between May and July 2018. We followed up the babies at an average age of 7 months (adjusted for prematurity) and assessed 211 preterm and 187 term infants for neurodevelopmental outcomes using the Malawi Developmental Assessment tool. Mothers were interviewed on care practices for the infants. Data were analyzed using STATA version 14. RESULTS: The study revealed a high incidence of NDD of 20.4% (43/211) among preterm infants compared to 7.5% (14/187) among the term babies, p < 0.001, of the same age. The most affected domain was fine motor (11.8%), followed by language (9.0%). At multivariate analysis, malnutrition and Kangaroo Mother Care (KMC) at home after discharge were the key factors that were significantly associated with NDD among preterm babies. The prevalence of malnutrition among preterm infants was 20% and this significantly increased the odds of developing NDD, OR = 2.92 (95% CI: 1.27-6.71). KMC practice at home reduced the odds of developing NDD, OR = 0.46, (95% CI: 0.21-1.00). Re-admission of preterm infants after discharge (a sign of severe illness) increased the odds of developing NDD but this was not statistically significant, OR = 2.33 (95% CI: 0.91-5.94). CONCLUSION: Our study has shown that preterm infants are at a high risk of developing NDD, especially those with malnutrition. Health system readiness should be improved to provide follow-up care with emphasis on improving nutrition and continuity of KMC at home.