To determine whether previously reported areas of increased T2 signal intensity on MRI examination in children with neurofibromatosis type 1 (NF 1) are associated with deficits in development and learning common in this population, we evaluated 51 children with NF 1 (aged 8 to 16 years). Forty children completed the full assessment protocol (MRI, medical, psychometric, speech therapy, and occupational therapy assessments). The mean Full Scale IQ scores for the entire study population showed a left shift compared with the normal population, and the distribution of IQ scores was bimodal, suggesting that there are two populations of patients with NF 1–those with and those without a variable degree of cognitive impairment. There was no association between lower IQ scores and any clinical variable. Areas of increased T2 signal intensity unidentified bright objects (UBO+) were present in 62.5% of the study population, and their presence was not related to clinical severity, sex, age, socioeconomic status, macrocephaly, or family history of NF 1. However, compared with children without areas of increased T2 signal intensity (UBO-), the UBO+ group had significantly lower mean values for IQ and language scores and significantly impaired visuomotor integration and coordination. Children with areas of increased T2 signal intensity were at a much higher risk for impaired academic achievement. Children without increased T2 signal on MRI (UBO-) did not significantly differ from the general population in any measure of ability or performance. Areas of increased T2 signal on MRI represent dysplastic glial proliferation and aberrant myelination in the developing brain and are associated with deficits in higher cognitive function. The presence of these abnormal signals on MRI divides the NF 1 population into two distinct groups anatomically and developmentally (UBO+ and UBO-). These two groups should be considered separately in the assessment and management of learning disability in children with NF 1.