OBJECTIVES: To determine the incidence of inguinal hernia in premature neonates and identify risk factors for incarceration. STUDY DESIGN: The 2003 and 2006 Kids' Inpatient Databases were queried for diagnoses indicative of premature birth and inguinal hernia. RESULTS: Inguinal hernia was diagnosed during the birth hospitalization in 1463 +/- 87 of 49 273 +/- 1561 premature neonates (3%). Male sex, gestational age, birth weight, and prolonged mechanical ventilation were associated with inguinal hernia (all P < .01). Incarceration occurred in 176 of 1123 premature neonates (16%) who underwent hernia repair during the birth hospitalization. Delaying repair beyond 40 weeks post-conceptual age doubled the risk of incarceration (21%), as compared with 36 to 39 weeks (9%) or <36 weeks (11%, P = .002). Sex, race, and insurance were not associated with incarceration. CONCLUSION: The risk of incarceration is doubled in premature neonates with inguinal hernia when repair is delayed beyond 40 weeks post-conceptual age. This increased incarceration risk should be one of the factors considered when deciding on the optimal timing of inguinal hernia repair.