This study investigated the effect of very preterm birth (gestation ≤30wks) and very low birth weight (≤1500g) on the development of magnocellular and parvocellular visual processing streams. Participants were preterm infants (n=55: 31 females, 24 males) born between 24 and 30 weeks’gestation (mean 27.4wks [SD 1.3]), weighing between 720 and 1470g (mean 1015g [SD 215]) and term infants (n=52: 27 females, 25 males) born between 38 and 42 weeks’gestation (mean 39.4wks [SD 0.9]), weighing between 2670 and 4405g (mean 3549g [SD 440]). Visual‐evoked potentials to phase‐reversing sine‐wave gratings, varying in spatial frequency and contrast, were used to elicit magnocellular and parvocellular specific responses. Previous studies found that the N1 component reflects the parvocellular response, while P1 reflects the magnocellular response in adults and infants. Findings from the current study indicate significantly lower P1 amplitudes in preterm compared with term infants under most conditions. No difference was found for the amplitude of the N1 waveform. Results indicate that, for the age‐range tested, preterm birth has little effect on the development of parvocellular function, while it appears to disrupt the development of magnocelluar function.