A male infant was born with asphyxia following a prolonged breech delivery at 39 weeks of gestation. He had a chylohemothorax from birth. Soon after birth he exhibited flaccid paraplegia with an absence of deep tendon reflexes in the lower extremities. At 17 days of age, magnetic resonance imaging (MRI) disclosed a hypodense area in the thoracic cord between C7 and Th4 in T1-weighted images, and spinal sonography revealed an echo-free space compressing the spinal cord in the same region observed with MRI. A spinal cyst was removed surgically at 24 days of age. The cyst was confirmed by pathology to be a true arachnoid cyst between C7 and Th4. The cause of this cyst may have been a spinal cord injury during the perinatal period.