Aim To establish the prevalence of positional head deformations (PHDs) within a neonatal unit (NU) setting, and to evaluate the subsequent impact that PHDs have on NU graduates and their families. Methods A prospective audit was conducted over a six‐week period within a tertiary NU (Brisbane, Australia). Eligible babies were measured weekly using a craniometer where presence, type and severity of PHD were determined. Univariate analysis was undertaken to establish differences in clinical characteristics between babies with, and without, the presence of PHD. A study‐specific survey was completed by a separate set of families returning for outpatient follow‐up services who represented similar clinical characteristics and risk factors for PHD. Results Fifty‐three babies were eligible for inclusion in the audit. PHDs were identified in 66% ( n = 35) of the cohort, the most common being scaphocephaly (52.8%, n = 28). Within that, 46% ( n = 13) were classed as mild, 25% ( n = 7) were moderate and 29% ( n = 8) were severe. Moderate correlation ( r = 0.55) was found between severity of scaphocephaly, and length of time spent in an isolette. Of the 10 (66% response from 15 families) surveys completed, 80% of respondents perceived that their child's PHD had impacted their life. Conclusions Two‐thirds of babies developed a PHD during their neonatal admission. Most families surveyed perceived this condition to have an impact on their lives beyond the confines of the nursery. Further research is needed to identify preventative interventions to decrease the prevalence and severity of this common condition.