We report a neonate presenting with an intrapericardial benign teratoma and an exceptionally high level of alpha-fetoprotein. Such severe elevation of alpha-fetoprotein in a neonate with a teratoma is usually associated with the presence of immature or malignant elements, compromising the prognosis. The tumour in our patient, however, proved to be completely benign. We discuss recent findings with regard to normal levels of alpha-fetoprotein levels in preterm infants, and in children with neonatal teratomas.