Preterm birth is a leading cause of cognitive impairment in childhood and is associated with cerebral gray and white matter abnormalities. Using multimodal image analysis, we tested the hypothesis that altered thalamic development is an important component of preterm brain injury and is associated with other macro- and microstructural alterations. T1- and T2-weighted magnetic resonance images and 15-direction diffusion tensor images were acquired from 71 preterm infants at term-equivalent age. Deformation-based morphometry, Tract-Based Spatial Statistics, and tissue segmentation were combined for a nonsubjective whole-brain survey of the effect of prematurity on regional tissue volume and microstructure. Increasing prematurity was related to volume reduction in the thalamus, hippocampus, orbitofrontal lobe, posterior cingulate cortex, and centrum semiovale. After controlling for prematurity, reduced thalamic volume predicted: lower cortical volume; decreased volume in frontal and temporal lobes, including hippocampus, and to a lesser extent, parietal and occipital lobes; and reduced fractional anisotropy in the corticospinal tracts and corpus callosum. In the thalamus, reduced volume was associated with increased diffusivity. This demonstrates a significant effect of prematurity on thalamic development that is related to abnormalities in allied brain structures. This suggests that preterm delivery disrupts specific aspects of cerebral development, such as the thalamocortical system.