Aim To describe trends in cerebral palsy (CP) prevalence, severity, and associated impairments among 139 Icelandic children (65 males, 74 females) born from 1990 to 1996 (period one) and 1997 to 2003 (period two). Method A population-based study using systematically collected data on motor functioning and associated impairments of children with CP. Mean age at assessment was 5 years 5 months (SD 7.68 mo) in period one and 5 years 5 months (SD 10.44 mo) in period two. Infants with postneonatal CP were excluded. Results Prevalence of CP per 1000 live births was 2.2 in period one and 2.3 in period two (p=0.862); it decreased from 1.5 to 0.9 for children born at term, was stable for preterm births, but increased from 33.7 to 114.6 for very preterm births (p=0.002). Concurrently, neonatal and infant mortality rates decreased in Iceland. The proportion of children born preterm increased over time (p=0.002), whereas improvements in gross motor function assessed with the Gross Motor Function Classification System were confined to term births (p=0.009). The proportion of children with diplegia increased, accompanied by a decrease in the proportion with quadriplegia (p=0.047). Furthermore, among term births there was a significant reduction over time in the proportion of children with epilepsy (p=0.030) and in the proportion with two or more associated impairments (p=0.030). Interpretation Although CP prevalence remained stable over 14 years, we observed a decrease in prevalence and severity of the disability among term births.