Traumatic brain injury (TBI) results in neurodegenerative changes that progress for months, perhaps even years post-injury. However, there is little information on the spatial distribution and the clinical significance of this late atrophy. In 24 patients who had sustained severe TBI we acquired 3D T1-weighted MRIs about 8 weeks and 12 months post-injury. For comparison, 14 healthy controls with similar distribution of age, gender and education were scanned with a similar time interval. For each subject, longitudinal atrophy was estimated using SIENA, and atrophy occurring before the first scan time point using SIENAX. Regional distribution of atrophy was evaluated using tensor-based morphometry (TBM). At the first scan time point, brain parenchymal volume was reduced by mean 8.4% in patients as compared to controls. During the scan interval, patients exhibited continued atrophy with percent brain volume change (%BVC) ranging between − 0.6% and − 9.4% (mean − 4.0%). %BVC correlated significantly with injury severity, functional status at both scans, and with 1-year outcome. Moreover, %BVC improved prediction of long-term functional status over and above what could be predicted using functional status at not, vert, similar 8 weeks. In patients as compared to controls, TBM (permutation test, FDR 0.05) revealed a large coherent cluster of significant atrophy in the brain stem and cerebellar peduncles extending bilaterally through the thalamus, internal and external capsules, putamen, inferior and superior longitudinal fasciculus, corpus callosum and corona radiata. This indicates that the long-term atrophy is attributable to consequences of traumatic axonal injury. Despite progressive atrophy, remarkable clinical improvement occurred in most patients.