To compare diffusion-weighted imaging (DWI) and non-DWI magnetic resonance imaging (MRI), proton MR spectroscopy (1H-MRS), and clinical biomarkers for prediction of 2 year developmental outcome in term infants with perinatal hypoxic-ischaemic encephalopathy (HIE). Nineteen infants ≥36 weeks gestation with HIE were recruited and MRI performed day 3-7 (mean = 5). MRI was scored independently by three radiologists using a standardized scoring system. Lactate-to-N-acetylaspartate ratio (Lac:NAA) in the lentiform nucleus was calculated. Developmental assessment was performed at 2 years using the Bayley Scales of Infant and Toddler Development (BSID-III). Interobserver agreement about abnormality in 10 brain regions was measured. Univariate analysis was performed to determine variables associated with adverse outcome (i.e., death or Bayley score for any domain <70). Good interobserver agreement (kappa = 0.61-0.69) on scores for DWI was obtained for the cortex, putamen, and brainstem, but not for any region on non-DWI. A significant association was found between outcome and Lac:NAA (p < 0.003) and DWI scores for lentiform nucleus, thalamus, cortex, posterior limb of the internal capsule (PLIC), and paracentral white matter (p = 0.001-0.013), but for non-DWI score only in the vermis or brainstem. A combination of Lac:NAA ≥0.25 or DWI/apparent diffusion coefficient (ADC) signal abnormality in the PLIC had 100% specificity and sensitivity for poor outcome. Interobserver agreement for non-DWI performed during the first week is poor. Agreement by three radiologists about the presence of abnormal signal within the PLIC on ADC/DWI images or elevation of Lac:NAA above 0.25 improved sensitivity without reducing the prognostic specificity of MRS in the 19 patients, but this requires validation in a larger group of infants with HIE who have been treated with hypothermia.