Aim: To compare refraction and keratometry readings between premature and term babies at 40 weeks’ postconceptional age (PCA), and the possible effect of birth weight (BW) and gestational age (GA) on ocular parameters. Methods: 33 preterm babies hospitalised in the neonatal unit between January and March 2002 were matched with 33 term babies born within the same period and hospitalised in the same unit. The preterm group underwent funduscopy at 4–5 weeks after delivery. Ophthalmic examination at 40 weeks’ PCA included cycloplegic retinoscopy, funduscopy, and keratometric measurements. Mean and standard deviation of refraction, astigmatic power (plus cylinder), axis of astigmatism, and keratometric reading were calculated and compared between groups and correlated with BW and GA in the premature babies. Results: Retinopathy of prematurity (ROP) stage 1 or 2 was noted in 88% of the premature babies on the first funduscopy examination, but only in 36% by the corrected age of 40 weeks. Statistically significant between groups differences were found for cycloplegic refraction (p = 0.02 for both eyes) and keratometry (p = 0.001 for both eyes). GA and BW had no impact on the refractive and keratometric findings in the preterm babies. Conclusions: Babies with mild ROP at the corrected age of 40 weeks have mild hypermetropia compared to the moderate hypermetropia found in term babies (a difference of 50%), and they have higher and steeper keratometric values. The greater corneal curvature may contribute to the development of myopia. Ophthalmologists and parents need to be aware of the possibility of visual dysfunction already very early in life even in relatively older premature infants.