As filed with the Securities and Exchange Commission on July 14, 1999
                                                    Registration No.  333 -
--------------------------------------------------------------------------------

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                  -------------

                                    FORM S-8
                             REGISTRATION STATEMENT
                                      UNDER
                           THE SECURITIES ACT OF 1933
                                  -------------
                                   PSINET INC.
             (Exact name of registrant as specified in its charter)

           New York                                               16-1353600
(State or other jurisdiction of                                (I.R.S. Employer
incorporation or organization)                               Identification No.)

510 Huntmar Park Drive, Herndon, Virginia                           20170
(Address of principal executive offices)                          (Zip Code)

                         EXECUTIVE STOCK INCENTIVE PLAN
                         STRATEGIC STOCK INCENTIVE PLAN
              OPTION AGREEMENT BETWEEN REGISTRANT AND SUSAN DISESA
                            (Full title of the plans)

                              David N. Kunkel, Esq.
                  Executive Vice President and General Counsel
                                   PSINet Inc.
                 510 Huntmar Park Drive, Herndon, Virginia 20170
                     (Name and address of agent for service)

                                 (703) 904-4100
          (Telephone number, including area code, of agent for service)
                                  -------------

                                    Copy to:
                           Richard F. Langan, Jr. Esq.
                                Nixon Peabody LLP
                  437 Madison Avenue, New York, New York 10022
           Telephone No.: (212) 940-3140/Facsimile No.: (212) 940-3111
                                  -------------

<TABLE>

---------------------------------------------------------------------------------------------------------------------

                                                  CALCULATION OF REGISTRATION FEE
-------------------------------- -------------------- -------------------- ---------------------- -------------------
<CAPTION>
                                                       Proposed maximum      Proposed maximum
      Title of securities           Amount to be        offering price      aggregate offering        Amount of
       to be registered            registered (1)        per share (2)           price(2)          registration fee
-------------------------------- -------------------- -------------------- ---------------------- -------------------
<S>           <C>                <C>                  <C>
Common Stock, $.01 par value     2,809,825 shares     $56.625              $159,106,340           $44,232
-------------------------------- -------------------- -------------------- ---------------------- -------------------

</TABLE>

         (1) Represents (i) 1,800,000 shares issuable upon the exercise of
options granted or to be granted under the Executive Stock Incentive Plan, (ii)
1,000,000 shares issuable upon the exercise of options granted or to be granted
under the Strategic Stock Incentive Plan, (iii) 9,825 shares issuable upon the
exercise of options granted under the Susan DiSesa option agreement, and (iv)
pursuant to Rule 416(a) of the Securities Act of 1933, such indeterminate number
of shares as may be issued by reason of any stock split, stock dividend,
recapitalization or similar transaction effected without the receipt of
consideration which results in an increase in our number of outstanding shares
of common stock.

         (2) Estimated in accordance with Rule 457(c) under the Securities Act
of 1933 solely for the purpose of calculating the registration fee. The
computation is based upon the average of the high and low prices of our common
stock as reported on the Nasdaq Stock Market's National Market on July 9, 1999.



<PAGE>


                                     PART I.

                  INFORMATION REQUIRED IN THE 10(a) PROSPECTUS


                                EXPLANATORY NOTE


         At our 1999 Annual Meeting of Shareholders held on May 17, 1999, our
shareholders approved amendments to our Executive Stock Incentive Plan and our
Strategic Stock Incentive Plan to increase the number of shares available for
issuance under each of the plans. This registration statement on Form S-8
relates to up to 1,800,000 additional shares of our common stock, par value $.01
per share, issuable pursuant to our Executive Stock Incentive Plan and up to
1,000,000 additional shares of our common stock issuable pursuant to our
Strategic Stock Incentive Plan. Accordingly, pursuant to Instruction E to SEC
Form S-8, the contents of the following earlier registration statements are
incorporated herein by reference: (1) Registration Statement on Form S-8,
relating to our Executive Stock Incentive Plan (No. 33-99464); and (2)
Registration Statement on Form S-8, relating to our strategic Stock Incentive
Plan (No. 33-99470).

         This registration statement also relates to 9,825 shares of our common
stock that may be issued to Susan DiSesa, upon the exercise of options granted
to her under an option agreement.

         The reoffer prospectus included herein is intended to register for
reoffer and/or resale 9,825 shares of our common stock that may be issued to Ms.
DiSesa upon the exercise of options granted to her under an option agreement.


                                      -2-
<PAGE>

REOFFER PROSPECTUS



                                   PSINET INC.
                          9,825 SHARES OF COMMON STOCK



         This prospectus relates to the offering of up to 9,825 shares of our
common stock which may be sold from time to time in one or more transactions by
Susan DiSesa, a former consultant of one of our subsidiaries. Ms. DiSesa is also
referred to as the "Selling Shareholder." We will not receive any of the
proceeds from the sale of these shares.

         The Selling Shareholder will sell the shares offered hereby at prices
which are current when the sales take place or at other prices upon which the
parties agree. The Selling Shareholder may or may not use brokers and dealers in
these transactions, but will pay brokerage fees or commissions, if relevant. We
will pay all of the expenses associated with the registration of the shares and
this prospectus.

         Our common stock is listed for trading on the Nasdaq Stock Market's
National Market under the symbol "PSIX." On July 9, 1999, the last reported sale
price of our common stock was $58.75.





                  --------------------------------------------



   INVESTMENT IN OUR COMMON STOCK INVOLVES RISK. SEE "RISK FACTORS" BEGINNING
                         ON PAGE 6 OF THIS PROSPECTUS.

     NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
           COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES, OR
             DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE.
            ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.


                  --------------------------------------------



                  The date of this prospectus is July 14, 1999




                                      -3-
<PAGE>



                                TABLE OF CONTENTS

                                                                            Page

The Company....................................................................5
Risk Factors...................................................................6
Use of Proceeds...............................................................21
Selling Shareholder...........................................................22
Plan of Distribution..........................................................23
Legal Matters.................................................................23
Experts.......................................................................23
Documents Incorporated by Reference...........................................23
Where You Can Find More Information...........................................24
Disclosure of Commission Position on Indemnification
for Securities Act Liabilities................................................25



                                      -4-
<PAGE>


                               PROSPECTUS SUMMARY


         THIS SUMMARY HIGHLIGHTS SOME INFORMATION FROM THIS PROSPECTUS. BECAUSE
THIS IS A SUMMARY, IT MAY NOT CONTAIN ALL OF THE INFORMATION THAT MAY BE
IMPORTANT TO YOU. YOU SHOULD READ THE ENTIRE PROSPECTUS, INCLUDING THE RISK
FACTORS BEFORE MAKING AN INVESTMENT DECISION.

         We are a leading global provider of Internet solutions to businesses.
We provide Internet connectivity and Web hosting services to customers in 90 of
the 100 largest metropolitan statistical areas in the U.S. and in 14 of the 20
largest global telecommunications markets. In addition to these services, we
also offer a suite of value-added products and services that are designed to
enable our customers to maximize utilization of the Internet to more efficiently
communicate with their customers, suppliers, business partners and remote office
locations. We conduct our business through operations organized into four
geographic operating segments--the U.S., Canada, Latin America, Europe and Asia.
Our services and products include access services that offer dedicated, dial-up,
wireless and digital subscriber line or xDSL connections, Web hosting services,
intranets, virtual private networks or VPNs, electronic commerce or e-commerce,
voice-over-IP, e-mail and managed security services. We also provide wholesale
and private label network connectivity and related services to other Internet
service providers, known as ISPs, and telecommunications carriers to further
utilize our network capacity.

         We operate one of the largest global commercial data communications
networks. Our Internet-optimized network has a footprint that extends around the
globe and is connected to approximately 525 sites, called points of presence or
POPs, situated throughout the U.S., Canada, Latin America, Europe and Asia that
enable our customers to connect to the Internet. Our network reach allows our
customers' employees to access their corporate network and systems resources
through local calls in over 150 countries. Our network architecture consists of
high capacity frame relay switches and routing and is compatible with all of the
most widely deployed transmission technologies. We further expand the reach of
our network by connecting with other large ISPs at 137 points through 67
contractual arrangements, called peering agreements, that permit the exchange of
information between our network and the networks of our peering partners. We
have recently opened three global Internet hosting facilities in the U.S.,
Switzerland and Canada containing a total of approximately 25,000 square feet
and are currently constructing additional data center capacity in London and New
York containing a total of approximately 61,000 square feet. We have two network
operating centers that monitor and manage network traffic 24-hours per day,
seven-days per week.

         Our mission is to build a premier Internet protocol-based
communications company. We have grown by using multiple sales channels,
including direct sales and resellers, and by acquiring other ISPs and related
businesses in key markets. We have increased revenues by providing services and
products that enhance our customers' business processes by helping them to
effectively use the Internet and related tools. We served, as of March 31, 1999,
approximately 59,700 business accounts, including 196 ISPs.



         We are a New York corporation and our principal executive offices are
located at 510 Huntmar Park Drive, Herndon, Virginia 20170. Our telephone number
is (703) 904-4100.





                                      -5-
<PAGE>


                                  RISK FACTORS

         BEFORE YOU INVEST IN OUR SECURITIES, YOU SHOULD BE AWARE THAT THERE ARE
VARIOUS RISKS, INCLUDING THE ONES LISTED BELOW. YOU SHOULD CAREFULLY CONSIDER
THESE RISK FACTORS, AS WELL AS THE OTHER INFORMATION CONTAINED IN THIS
PROSPECTUS, IN EVALUATING AN INVESTMENT IN OUR SECURITIES.

WE HAVE SIGNIFICANT INDEBTEDNESS AND WE MAY NOT BE ABLE TO MEET OUR OBLIGATIONS

         We are highly leveraged and have significant debt service requirements.
As of March 31, 1999, our total indebtedness was $1.28 billion, representing
116% of total capitalization, and our interest expense for the year ended
December 31, 1998 and the three months ended March 31, 1999 was $63.9 million
and $29.6 million, respectively.

         Our high level of indebtedness could have several important effects on
our future operations, which, in turn, could have important consequences for the
holders of our securities, including the following:

           *  a substantial portion of our cash flow from operations must be
              used to pay interest on our indebtedness and, therefore, will not
              be available for other business purposes;

           *  covenants contained in the agreements evidencing our debt
              obligations require us to meet many financial tests, and other
              restrictions limit our ability to borrow additional funds or to
              dispose of assets and may affect our flexibility in planning for,
              and reacting to, changes in our business, including possible
              acquisition activities and capital expenditures; and

           *  our ability to obtain additional financing in the future for
              working capital, capital expenditures, acquisitions, general
              corporate purposes or other purposes may be impaired.

         Our ability to meet our debt service obligations and to reduce our
total indebtedness depends on our future operating performance and on economic,
financial, competitive, regulatory and other factors affecting our operations.
Many of these factors are beyond our control and our future operating
performance could be adversely affected by some or all of these factors. We
historically have been unable to generate sufficient cash flow from operations
to meet our operating needs and have relied on equity, debt and capital lease
financings to fund our operations. However, based on our current level of
operations, management believes that existing working capital, existing credit
facilities, capital lease financings and proceeds of future equity or debt
financings will be adequate to meet our presently anticipated future
requirements for working capital, capital expenditures and scheduled payments of
interest on our debt. We cannot assure, however, that our business will generate
sufficient cash flow from operations or that future working capital borrowings
will be available in an amount sufficient to enable us to service our debt or to
make necessary capital expenditures. In addition, we cannot assure that we will
be able to raise additional capital for any refinancing of our debt in the
future.

WE HAVE EXPERIENCED CONTINUING LOSSES, NEGATIVE CASH FLOW AND FLUCTUATIONS IN
OPERATING RESULTS

         Our prospects must be considered in light of the risks, expenses and
difficulties frequently encountered by companies in new and rapidly evolving
markets. To address these risks, we must, among other things, respond to
competitive developments, continue to attract and retain qualified persons, and
continue to upgrade our technologies and commercialize our network services
incorporating such technologies. We cannot assure that we will be successful in
addressing such risks, and the failure to do so could have a material adverse
effect on our business, financial condition, results of operations and ability
to pay when due principal, interest and other amounts in respect of our debt.
Although we have experienced revenue growth on an annual basis with revenue
increasing from $84.4 million in 1996 to


                                      -6-
<PAGE>


$121.9 million in 1997 to $259.6 million in 1998, we have incurred losses and
experienced negative earnings before interest expense and interest income,
taxes, depreciation and amortization, other income and expense, and charge for
acquired in-process research and development ("EBITDA") during each of such
periods. We expect to continue to operate at a net loss and experience negative
EBITDA in the near term as we continue our acquisition program and the expansion
of our global network operations. We have incurred net losses available to
common shareholders of $55.1 million, $46.0 million and $264.9 million and have
incurred negative EBITDA of $28.0 million, $21.2 million and $42.1 million for
each of the years ended December 31, 1996, 1997 and 1998, respectively. During
the three months ended March 31, 1999, we incurred net losses available to
common shareholders of $59.3 million and negative EBITDA of $6.8 million. At
March 31, 1999, we had an accumulated deficit of $486.9 million. We cannot
assure that we will be able to achieve or sustain profitability or positive
EBITDA.

         Our operating results have fluctuated in the past and may fluctuate
significantly in the future as a result of a variety of factors, some of which
are outside our control. These factors, include, among others:

           *   general economic conditions and specific economic conditions in
               the Internet access industry;

           *   user demand for Internet services;

           *   capital expenditures and other costs relating to the expansion of
               operations of our network;

           *   the introduction of new services by us or our competitors;

           *   the mix of services sold and the mix of channels through which
               those services are sold;

           *   pricing changes and new product introductions by us and our
               competitors;

           *   delays in obtaining sufficient supplies of sole or limited source
               equipment and telecom facilities; and

           *   potential adverse regulatory developments.

         As a strategic response to a changing competitive environment, we may
elect from time to time to make pricing, service or marketing decisions that
could have a material adverse effect on our business, results of operations and
cash flow.

WE ARE PARTIALLY DEPENDENT ON OUR SUBSIDIARIES FOR REPAYMENT OF DEBT

         We are an operating entity which also conducts a significant portion of
our business through our subsidiaries. Our cash flow from operations and
consequently our ability to service our debt, including our 10% senior notes and
11 1/2% senior notes, is therefore partially dependent upon our subsidiaries'
earnings and their distributions of those earnings to us. It may also be
dependent upon loans, advances or other payments of funds to us by those
subsidiaries. Our subsidiaries have no obligation, contingent or otherwise, to
make any funds available to us for payment of the principal of or interest on
many of our debt obligations, including our 10% senior notes and 11 1/2% senior
notes. Our subsidiaries' ability to make payments may be subject to the
availability of sufficient surplus funds, the terms of such subsidiaries'
indebtedness, applicable laws and other factors.

         Our subsidiaries' creditors will have priority to the assets of such
subsidiaries over the claims of PSINet and the holders of our indebtedness. One
exception is that if such subsidiaries have provided guarantees of our
indebtedness and if loans made by us to our subsidiaries are recognized as
indebtedness, they will not have such priorities. In any event, our 10% senior
notes and 11 1/2% senior notes are effectively subordinated in right of payment
to all existing and future indebtedness and other liabilities of our
subsidiaries, including trade payables. As of March 31, 1998, our subsidiaries
had approximately $181.1 million of total liabilities, including trade payables
and accrued liabilities, to which holders of our


                                      -7-
<PAGE>


10% senior notes and 11 1/2% senior notes are structurally subordinated. Under
the terms of agreements evidencing our debt obligations, some of our
subsidiaries are restricted in their ability to incur debt in the future.

WE MAY NOT BE ABLE TO FUND THE EXPANSION WE WILL NEED TO REMAIN COMPETITIVE

         In order to maintain our competitive position and continue to meet the
increasing demands for service quality, availability and competitive pricing, we
expect to make significant capital expenditures. At March 31, 1999, we were
obligated to make future payments that total $99.5 million for acquisitions of
global fiber-based telecommunications bandwidth, including indefeasible rights
of use or other rights. We also expect that there will be additional costs, such
as connectivity and equipment charges, in connection with taking full advantage
of such acquired bandwidth and indefeasible rights of use. Although we are
currently unable to estimate the extent of such additional costs, we currently
anticipate that our capital expenditures in 1999 will be consistent with those
in 1998.

         We historically have been unable to generate sufficient cash flow from
operations to meet our operating needs and have relied on equity, debt and
capital lease financings to fund our operations. However, we believe that we
will have a reasonable degree of flexibility to adjust the amount and timing of
these capital expenditures in response to market conditions, competition, our
then-existing financing capabilities and other factors. We also believe that
working capital generated from the use of acquired bandwidth, together with
other existing working capital, existing credit facilities, capital lease
financings and proceeds of future equity or debt financings will be sufficient
to meet the presently anticipated working capital and capital expenditure
requirements of our operations.

         We may need to raise additional funds in order to take advantage of
unanticipated opportunities, more rapid international expansion or acquisitions
of complementary businesses. In addition, we may need to raise additional funds
to develop new products or otherwise respond to changing business conditions or
unanticipated competitive pressures. We cannot assure that we will be able to
raise such funds on favorable terms. In the event that we are unable to obtain
such additional funds on acceptable terms, we may determine not to enter into
various expansion opportunities.

WE FACE RISKS ASSOCIATED WITH ACQUISITIONS AND STRATEGIC ALLIANCES RELATING TO
DIFFICULTIES IN INTEGRATING COMBINED OPERATIONS, INCURRENCE OF ADDITIONAL DEBT
TO FINANCE ACQUISITIONS AND OPERATIONS OF ACQUIRED BUSINESSES, POTENTIAL
DISRUPTION OF OPERATIONS AND RELATED NEGATIVE IMPACT ON EARNINGS, AND INCURRENCE
OF SUBSTANTIAL EXPENSES THAT COULD ADVERSELY AFFECT OUR FINANCIAL CONDITION

         Growth through acquisitions represents a principal component of our
business strategy. Over the 19 months ended April 30, 1999, we acquired 22
Internet service providers in ten of the 20 largest global telecommunications
markets. We expect to continue to acquire assets and businesses principally
relating to or complementary to our current operations. We may also seek to
develop strategic alliances both domestically and internationally. Any such
future acquisitions or strategic alliances would be accompanied by the risks
commonly encountered in acquisitions or strategic alliances. Such risks include,
among other things:

           *   the difficulty of integrating the operations and personnel of the
               companies;

           *   the potential disruption of our ongoing business;

           *   the inability of management to maximize our financial and
               strategic position by the successful incorporation of licensed or
               acquired technology and rights into our service offerings; and


                                      -8-
<PAGE>


           *   the inability to maintain uniform standards, controls, procedures
               and policies and the impairment of relationships with employees
               and customers as a result of changes in management.

         We cannot assure that we will be successful in overcoming these risks
or any other problems encountered in connection with such acquisitions or
strategic alliances. We believe that after eliminating redundant network
architecture and administrative functions and taking other actions to integrate
the operations of acquired companies we will be able to realize cost savings.
However, we cannot assure that our integration of acquired companies' operations
will be successfully accomplished. Our inability to improve the operating
performance of acquired companies' businesses or to integrate successfully the
operations of acquired companies could have a material adverse effect on our
business, financial condition and results of operations. In addition, as we
proceed with acquisitions in which the consideration consists of cash, a
substantial portion of our available cash will be used to consummate such
acquisitions.

         As with each of our recent acquisitions, the purchase price of many of
the businesses that might become attractive acquisition candidates for us likely
will significantly exceed the fair values of the net assets of the acquired
businesses. As a result, material goodwill and other intangible assets would be
required to be recorded which would result in significant amortization charges
in future periods. In addition, an intangible asset that frequently arises in
connection with the acquisition of a technology company is "acquired in-process
research and development," which under U.S. accounting standards, as presently
in effect, must be expensed immediately upon acquisition. Such expenses, in
addition to the financial impact of such acquisitions, could have a material
adverse effect on our business, financial condition and results of operations
and could cause substantial fluctuations in our quarterly and yearly operating
results. Furthermore, in connection with acquisitions or strategic alliances, we
could incur substantial expenses, including the expenses of integrating the
business of the acquired company or the strategic alliance with our existing
business.

         We expect that competition for appropriate acquisition candidates may
be significant. We may compete with other telecommunications companies with
similar acquisition strategies, many of which may be larger and have greater
financial and other resources than we have. Competition for Internet companies
is based on a number of factors including price, terms and conditions, size and
access to capital, ability to offer cash, stock or other forms of consideration
and other matters. We cannot assure that we will be able to successfully
identify and acquire suitable companies on acceptable terms and conditions.

OUR  GROWTH AND  EXPANSION  MAY STRAIN OUR  ABILITY TO MANAGE OUR  OPERATIONS
AND OUR  FINANCIAL RESOURCES

         Our rapid growth has placed a strain on our administrative, operational
and financial resources and has increased demands on our systems and controls.
We have approximately 525 points-of-presence and we plan to continue to expand
the capacity of existing points-of-presence as customer-driven demand dictates.
In addition, we have completed a number of acquisitions of companies and
telecommunications bandwidth during 1998 and plan to continue to do so. We
anticipate that our Carrier and Internet Service Provider Services business
unit, as well as other business growth, may require continued enhancements to
and expansion of our network. The process of consolidating the businesses and
implementing the strategic integration of these acquired businesses with our
existing business may take a significant amount of time. It may also place
additional strain on our resources and could subject us to additional expenses.
We cannot assure that we will be able to integrate these companies successfully
or in a timely manner. In addition, we cannot assure that our existing operating
and financial control systems and infrastructure will be adequate to maintain
and effectively monitor future growth.


                                      -9-
<PAGE>


         Our continued growth may also increase our need for qualified
personnel. We cannot assure that we will be successful in attracting,
integrating and retaining such personnel. The following risks, associated with
our growth, could have a material adverse effect on our business, results of
operations and financial condition:

           *   our inability to continue to upgrade our networking systems or
               our operating and financial control systems;

           *   our inability to recruit and hire necessary personnel or to
               successfully integrate new personnel into our operations;

           *   our inability to successfully integrate the operations of
               acquired companies or to manage our growth effectively; or

           *   our inability to adequately respond to the emergence of
               unexpected expansion difficulties.

WE FACE RISKS ASSOCIATED WITH OUR ACQUISITIONS OF BANDWIDTH FROM NETWORK
SUPPLIERS, INCLUDING OUR STRATEGIC ALLIANCE WITH IXC COMMUNICATIONS INC.,
RELATING TO OUR DEPENDENCE ON THEIR ABILITY TO SATISFY THEIR OBLIGATIONS TO US,
THE POSSIBILITY THAT WE MAY NEED TO INCUR SIGNIFICANT EXPENSES TO UTILIZE
BANDWIDTH AND THEIR ABILITY TO BUILDOUT THEIR NETWORKS UNDER CONSTRUCTION THAT
COULD ADVERSELY AFFECT OUR ABILITY TO UTILIZE ACQUIRED BANDWIDTH

         We are subject to a variety of risks relating to our recent
acquisitions of fiber-based telecommunications bandwidth from our various global
network suppliers, including our strategic alliance with IXC Communications
Inc., and the delivery, operation and maintenance of such bandwidth. Such risks
include, among other things, the following:

           *   the risk that financial, legal, technical and/or other matters
               may adversely affect such suppliers' ability to perform their
               respective operation, maintenance and other services relating to
               such bandwidth, which may adversely affect our use of such
               bandwidth;

           *   the risk that we will not have access to sufficient additional
               capital and/or financing on satisfactory terms to enable us to
               make the necessary capital expenditures to take full advantage of
               such bandwidth;

           *   the risk that such suppliers may not continue to have the
               necessary financial resources to enable them to complete, or may
               otherwise elect not to complete, their contemplated buildout of
               their respective fiber optic telecommunications systems; and

           *   the risk that such buildout may be delayed or otherwise adversely
               affected by presently unforeseeable legal, technical and/or other
               factors.

         We cannot assure that we will be successful in overcoming these risks
or any other problems encountered in connection with our acquisitions of
bandwidth.

INTERNATIONAL EXPANSION IS A KEY COMPONENT OF OUR BUSINESS STRATEGY AND, IF WE
ARE UNABLE TO COMPLETE THIS EXPANSION, OUR FINANCIAL CONDITION MAY BE ADVERSELY
AFFECTED

         A key component of our business strategy is our continued expansion
into international markets. We may need to enter into joint ventures or other
strategic relationships with one or more third parties in order to conduct our
foreign operations successfully. However, we cannot assure that we will be able
to obtain the permits and operating licenses required for us to operate, to hire
and train employees or to market, sell and deliver high quality services in
these markets. In addition to the uncertainty as to our


                                      -10-
<PAGE>

ability to continue to expand our international presence, there are risks
inherent in doing business on an international level. Such risks include:

           *   unexpected changes in or delays resulting from regulatory
               requirements, tariffs, customs, duties and other trade barriers;

           *   difficulties in staffing and managing foreign operations;

           *   longer payment cycles and problems in collecting accounts
               receivable;

           *   fluctuations in currency exchange rates and foreign exchange
               controls which restrict or prohibit repatriation of funds;

           *   technology export and import restrictions or prohibitions;

           *   delays from customs brokers or government agencies;

           *   seasonal reductions in business activity during the summer months
               in Europe and other parts of the world; and

           *   potentially adverse tax consequences, which could adversely
               impact the success of our international operations.

         We cannot assure that such factors will not have an adverse effect on
our future international operations and, consequently, on our business,
financial condition and results of operations. In addition, we cannot assure
that laws or administrative practice relating to taxation, foreign exchange or
other matters of countries within which we operate will not change. Any such
change could have a material adverse effect on our business, financial condition
and results of operations.

         In particular, we have also recently made significant investments in
Japan, which is currently experiencing a severe economic recession. Other
Asian-Pacific countries in which we operate are also experiencing economic
difficulties and uncertainties. These economic difficulties and uncertainties
could have a material adverse effect on our business, financial condition and
results of operations.

WE DEPEND ON KEY PERSONNEL AND COULD BE AFFECTED BY THE LOSS OF THEIR SERVICES

         Competition for qualified employees and personnel in the Internet
services industry is intense and there are a limited number of persons with
knowledge of and experience in the Internet service industry. The process of
locating such personnel with the combination of skills and attributes required
to carry out our strategies is often lengthy. Our success depends to a
significant degree upon our ability to attract and retain qualified management,
technical, marketing and sales personnel and upon the continued contributions of
such management and personnel. In particular, our success is highly dependent
upon the personal abilities of our senior executive management, including
William L. Schrader, our Chairman of the Board and Chief Executive Officer and
the founder of PSINet, Harold S. Wills, our President and Chief Operating
Officer, and Edward D. Postal, our Senior Vice President and Chief Financial
Officer. We have employment agreements with Messrs. Wills and Postal. The loss
of the services of any one of them could have a material adverse effect on our
business, financial condition or results of operations.

WE DEPEND ON SUPPLIERS AND COULD BE AFFECTED BY CHANGES IN SUPPLIERS OR DELAYS
IN DELIVERY OF THEIR PRODUCTS AND SERVICES

         We have few long-term contracts with our suppliers. We are dependent on
third party suppliers for our leased-line connections or bandwidth. Some of
these suppliers are or may become competitors of ours, and such suppliers are
not subject to any contractual restrictions upon their ability to compete with
us. If these suppliers change their pricing structures, we may be adversely
affected. Moreover, any


                                      -11-
<PAGE>

failure or delay on the part of our network providers to deliver bandwidth to us
or to provide operations, maintenance and other services with respect to such
bandwidth in a timely or adequate fashion could adversely affect us.

         We are also dependent on third party suppliers of hardware components.
Although we attempt to maintain a minimum of two vendors for each required
product, some components used by us in providing our networking services are
currently acquired or available from only one source. We have from time to time
experienced delays in the receipt of hardware components and telecommunications
facilities, including delays in delivery of PRI telecommunications facilities,
which connect dial-up customers to our network. A failure by a supplier to
deliver quality products on a timely basis, or the inability to develop
alternative sources if and as required, could result in delays which could have
a material adverse effect on us. Our remedies against suppliers who fail to
deliver products on a timely basis are limited by contractual liability
limitations contained in supply agreements and purchase orders and, in many
cases, by practical considerations relating to our desire to maintain good
relationships with the suppliers. As our suppliers revise and upgrade their
equipment technology, we may encounter difficulties in integrating the new
technology into our network.

         Many of the vendors from whom we purchase telecommunications bandwidth,
including the regional bell operating companies, competitive local exchange
carriers and other local exchange carriers, currently are subject to tariff
controls and other price constraints which in the future may be changed. In
addition, recently enacted legislation will produce changes in the market for
telecommunications services. These changes may affect the prices which we are
charged by the regional bell operating companies and other carriers, which could
have a material adverse effect on our business, financial condition and results
of operations. Moreover, we are subject to the effects of other potential
regulatory actions which, if taken, could increase the cost of our
telecommunications bandwidth through, for example, the imposition of access
charges.

THE TERMS OF OUR FINANCING ARRANGEMENTS MAY RESTRICT OUR OPERATIONS

         Our financing arrangements are secured by substantially all of our
assets and stock of some of our subsidiaries. These financing arrangements
require that we satisfy many financial covenants. Our ability to satisfy these
financial covenants may be affected by events beyond our control and, as a
result, we cannot assure you that we will be able to continue to satisfy such
covenants. These financing arrangements also currently prohibit us from paying
dividends and repurchasing our capital stock without the lender's consent. Our
failure to comply with the covenants and restrictions in these financing
arrangements could lead to a default under the terms of these agreements. In the
event of a default under the financing arrangements, our lenders would be
entitled to accelerate the indebtedness outstanding thereunder and foreclose
upon the assets securing such indebtedness. They would also be entitled to be
repaid from the proceeds of the liquidation of those assets before the assets
would be available for distribution to the holders of our securities, including
the holders of the notes. In addition, the collateral security arrangements
under our existing financing arrangements may adversely affect our ability to
obtain additional borrowings.

OUR FINANCIAL CONDITION MAY BE ADVERSELY AFFECTED IF OUR SYSTEMS AND THOSE OF
OUR SUPPLIERS FAIL BECAUSE OF YEAR 2000 PROBLEMS

         The commonly referred to Year 2000 ("Y2K") problem results from the
fact that many existing computer programs and systems use only two digits to
identify the year in the date field. These programs were designed and developed
without considering the impact of a change in the century designation. If not
corrected, computer applications that use a two-digit format could fail or
create erroneous results in


                                      -12-
<PAGE>

any computer calculation or other processing involving the Year 2000 or a later
date. We have identified two main areas of Y2K risk:

                  1. Internal computer systems or embedded chips could be
         disrupted or fail, causing an interruption or decrease in productivity
         in our operations; and

                  2. Computer systems or embedded chips of third parties
         including, without limitation, financial institutions, suppliers,
         vendors, landlords, customers, international suppliers of
         telecommunications services and others, could be disrupted or fail,
         causing an interruption or decrease in our ability to continue our
         operations.

         We have developed detailed plans for implementing, testing and
completing any necessary modifications to our key computer systems and equipment
with embedded chips to ensure that they are Y2K compliant. We have engaged a
third party consultant to perform an assessment of our U.S. internal systems
(e.g., accounting, billing, customer support and network operations) to
determine the status of their Y2K compliance. The assessment of these systems
has been completed and, while some minor changes are necessary, we believe that
no material changes or modifications to our internal systems are required to
achieve Y2K compliance. Our U.S. chief information officer has developed a test
bed of our U.S. internal systems to implement and complete testing of the
requisite minor changes. We anticipate that our U.S. internal systems will be
Y2K ready by September 30, 1999. We are in the process of completing an
inventory of our internal systems that we use in Canada, United Kingdom, Europe
and Asia to determine the status of their Y2K compliance. Each international
office has plans in place to test, upgrade or, if necessary, replace components
of its internal systems to ensure they are Y2K compliant. We anticipate that our
international operations will be Y2K compliant during the fourth quarter of
1999. To help ensure that our network operations and services to our customers
are not interrupted due to the Y2K problem, we have established a network
operations team that meets weekly to examine our network on a worldwide basis.
This team of operational staff have conducted inventories of our network
equipment (software and hardware) and have found no material Y2K compliance
issues. We believe that all equipment currently being purchased for use in the
PSINet network is Y2K compliant. Any existing equipment that is not Y2K
compliant is planned to be made Y2K compliant through minor changes to the
software or hardware or, in limited instances, replacement of the equipment. We
anticipate that our network will be Y2K compliant by the end of the second
quarter of 1999. In addition to administering the implementation of necessary
upgrades for Y2K compliance, our network team is developing a contingency plan
to address any potential problems that may occur with our network as we enter
the year 2000. We believe that, as a result of our detailed assessment and
completed modifications, the Y2K issue will not pose significant operational
problems for us. However, if the requisite modifications and conversions are not
made, or not completed in a timely fashion, it is possible that the Y2K problem
could have a material impact on our operations.

         Our cost of addressing Y2K issues has been minor to date, less than 5%
of our information technology and network operations budgets, but this amount
may increase if additional outside consultants or personnel resources are
required or if important operational equipment must be remediated or replaced.
Our estimated total costs related to Y2K issues for 1999 is not expected to
exceed $2.0 million. These costs include equipment, consulting fees, software
and hardware upgrades, testing, remediation and, in limited instances,
replacement of equipment. The risk that Y2K issues could present to us include,
without limitation, disruption, delay or cessation of operations, including
operations that are subject to regulatory compliance. In each case, the
correction of the problem could result in substantial expense and disruption or
delay of our operations. The total cost of Y2K assessments and remediation is
funded through cash on hand and available from other sources and we are
expensing these costs, as appropriate. The financial impact of making all
required systems changes or other remediation efforts cannot be known precisely,
but it is not expected to be material to our financial position, results of


                                      -13-
<PAGE>


operations, or cash flows. We have not canceled any principal information
technology projects as a result of our Y2K effort, although we have rescheduled
some internal tasks to accommodate this effort.

         In addition, we have identified, prioritized and are communicating with
our suppliers, vendors, customers, lenders and other material third parties to
determine their Y2K status and any probable impact on us. To date, our inquiries
have not revealed any significant Y2K noncompliance issue affecting our material
third parties. We will continue to monitor and evaluate our long-term
relationships with our material third parties based on their responses to our
inquiries and on information learned from other sources. If any of our material
third parties are not Y2K ready and their non-compliance causes a material
disruption to any of their respective businesses, our business could be
materially adversely affected. Disruptions could include, among other things:

           *    the failure of a material third party's business;

           *    a financial institution's inability to take and transfer funds;

           *    an interruption in delivery of supplies from vendors;

           *    a loss of voice and data connections;

           *    a loss of power to our facilities; and

           *    other interruptions in the normal course of our operations, the
               nature and extent of which we cannot foresee.

         We will continue to evaluate the nature of these risks, but at this
time we are unable to determine the probability that any such risk will occur,
or if it does occur, what the nature, length or other effects, if any, it may
have on us. If any of our material third parties experience significant failures
in their computer systems or operations due to Y2K non-compliance, it could
affect our ability to process transactions or otherwise engage in similar normal
business activities. For example, while we expect our internal systems, U.S. and
non-U.S., to be Y2K ready in stages during 1999, we and our customers who
communicate internationally will be dependent upon the Y2K-readiness of many
non-U.S. providers of telecommunication services and their vendors and
suppliers. If these providers and others are not Y2K ready, we and our customers
will not be able to send and receive data and other electronic transmissions,
which would have a material adverse effect on our revenues and business and that
of our customers. While many of these risks are outside our control, we have
identified and contacted our critical third party vendors and suppliers and are
establishing contingency plans to remedy any potential interruption to our
operations.

         While we believe that we are adequately addressing the Y2K issue, we
can not assure that our Y2K compliance effort will prevent every potential
interruption or that the cost and liabilities associated with the Y2K issue will
not materially adversely impact our business, prospects, revenues or financial
position. We are uncertain as to our most reasonably likely worst case Y2K
scenario and have not yet completed a contingency plan to handle a worst case
scenario. We expect to have such contingency plan in place by September 30,
1999.

WE FACE A HIGH LEVEL OF COMPETITION IN THE INTERNET SERVICES INDUSTRY

         The market for Internet connectivity and related services is extremely
competitive. We anticipate that competition will continue to intensify as the
use of the Internet grows. The tremendous growth and potential market size of
the Internet access market has attracted many new start-ups as well as
established businesses from different industries.

                                      -14-
<PAGE>

         Our current and prospective competitors include other national,
regional and local Internet service providers, long distance and local exchange
telecommunications companies, cable television, direct broadcast satellite,
wireless communications providers and on-line service providers. We believe that
our network, products and customer service distinguish us from these
competitors. However, some of these competitors have a significantly greater
market presence, brand recognition and financial, technical and personnel
resources than us.

         We compete with all of the major long distance companies, also known as
interexchange carriers, including AT&T, MCIWorldCom, Sprint and Cable &
Wireless/IMCI, which also offer Internet access services. The recent sweeping
reforms in the federal regulation of the telecommunications industry have
created greater opportunities for local exchange carriers, including the
regional bell operating companies, to enter the Internet connectivity market. We
believe that there is a move toward horizontal integration through acquisitions
of, joint ventures with, and the wholesale purchase of connectivity from
Internet service providers to address the Internet connectivity requirements of
the current business customers of long distance and local carriers. The
WorldCom/MFS/UUNet consolidation, the WorldCom/MCI merger, the ICG/NETCOM
merger, Cable & Wireless' purchase of the internetMCI assets, the
Intermedia/DIGEX merger, GTE's acquisition of BBN, Global Crossing's recently
announced plans to acquire Frontier Corp. (and Frontier's acquisition of Global
Center) and AT&T's purchase of IBM's global communications network are
indicative of this trend. Accordingly, we expect to experience increased
competition from the traditional telecommunications carriers. Many of these
telecommunications carriers may have the ability to bundle Internet access with
basic local and long distance telecommunications services. Such bundling of
services may have an adverse effect on our ability to compete effectively with
the telecommunications providers and may result in pricing pressure on us that
could have a material adverse effect on our business, financial condition and
results of operations.

         Many of the major cable companies have announced that they are
exploring the possibility of offering Internet connectivity, relying on the
viability of cable modems and economical upgrades to their networks. Several
announcements also have recently been made by other alternative service
companies approaching the Internet connectivity market with various wireless
terrestrial and satellite-based service technologies.

         The predominant on-line service providers, including America Online,
CompuServe, Microsoft Network and Prodigy, have all entered the Internet access
business by engineering their current proprietary networks to include Internet
access capabilities. We compete to a lesser extent with these on-line service
providers. However, America Online's recent acquisition of Netscape
Communications Corporation and related strategic alliance with Sun Microsystems
will enable it to offer a broader array of Internet protocol-based services and
products that could significantly enhance its ability to appeal to the business
marketplace and, as a result, compete more directly with us.

         Recently, there have been several announcements regarding the planned
deployment of broadband services for high speed Internet access by cable and
telephone companies. These services would include new technologies such as cable
modems and xDSL. These providers have initially targeted the residential
consumer. However, it is likely that their target markets will expand to
encompass business customers, which is our target market. This expansion could
adversely affect the pricing of our service offerings.

         As a result of the increase in the number of competitors and the
vertical and horizontal integration in the industry, we currently encounter and
expect to continue to encounter significant pricing pressure and other
competition in the future. Advances in technology as well as changes in the
marketplace and the regulatory environment are constantly occurring, and we
cannot predict the effect that ongoing or future developments may have on us or
on the pricing of our products and services. Increased price or other


                                      -15-
<PAGE>

competition could result in erosion of our market share and could have a
material adverse effect on our business, financial condition and results of
operations. We cannot assure that we will have the financial resources,
technical expertise or marketing and support capabilities to continue to compete
successfully.

         As we continue to expand our operations outside the United States, we
will encounter new competitors and competitive environments. In some cases, we
will be forced to compete with and buy services from government-owned or
subsidized telecommunications providers. Some of these providers may enjoy a
monopoly on telecommunications services essential to our business. We cannot
assure that we will be able to purchase such services at a reasonable price or
at all. In addition to the risks associated with our previously described
competitors, foreign competitors may pose an even greater risk, as they may
possess a better understanding of their local markets and better working
relationships with local infrastructure providers and others. We cannot assure
that we can obtain similar levels of local knowledge. Failure to obtain that
knowledge could place us at a significant competitive disadvantage.

TECHNOLOGY TRENDS AND EVOLVING INDUSTRY STANDARDS COULD RESULT IN OUR
COMPETITORS DEVELOPING OR OBTAINING ACCESS TO BANDWIDTH AND TECHNOLOGIES THAT
CARRY MORE INFORMATION FASTER THAN OUR BANDWIDTH AND TECHNOLOGY AND,
CONSEQUENTLY, RENDER OUR BANDWIDTH OR TECHNOLOGY OBSOLETE

         Our products and services are targeted toward users of the Internet,
which has experienced rapid growth. The market for Internet access and related
services is characterized by rapidly changing technology, evolving industry
standards, changes in customer needs and frequent new product and service
introductions. Our future success will depend, in part, on our ability to
effectively use and develop leading technologies.

         We cannot assure that we will be successful in responding to changing
technology or market trends. In addition, services or technologies developed by
others may render our services or technologies uncompetitive or obsolete.
Furthermore, changes to our services in response to market demand may require
the adoption of new technologies that could likewise render many of our assets
technologically uncompetitive or obsolete. As we accept bandwidth from IXC and
our other existing global network suppliers or acquire bandwidth or equipment
from other suppliers that may better meet our needs than existing bandwidth or
equipment, many of our assets could be determined to be obsolete or excess. The
disposition of obsolete or excess assets could have a material adverse effect on
our business, financial condition and results of operations.

         Even if we do successfully respond to technological advances and
emerging industry standards, the integration of new technology may require
substantial time and expense, and we cannot assure that we will succeed in
adapting our network infrastructure in a timely and cost-effective manner.

WE MAY BE LIABLE FOR INFORMATION DISSEMINATED THROUGH NETWORK

         The law relating to liability of Internet service providers for
information carried on or disseminated through their networks is not completely
settled. A number of lawsuits have sought to impose such liability for
defamatory speech and infringement of copyrighted materials. The U.S. Supreme
Court has let stand a lower court ruling which held that an Internet service
provider was protected from liability for material posted on its system by a
provision of the Communications Decency Act. However, the findings in that case
may not be applicable in other circumstances. Other courts have held that online
service providers and Internet service providers may, under some circumstances,
be subject to damages for copying or distributing copyrighted materials.
Provisions of the Communications Decency Act which imposed criminal penalties
for using an interactive computer service for transmitting obscene or indecent
communications have been found unconstitutional by the U.S. Supreme Court.
However, on October 21, 1998, new federal legislation was enacted that requires
limitations on access to pornography and other


                                      -16-
<PAGE>

material deemed "harmful to minors." This legislation has been attacked in court
as a violation of the First Amendment. We are unable to predict the outcome of
this case. The imposition upon Internet service providers or web server hosts of
potential liability for materials carried on or disseminated through their
systems could require us to implement measures to reduce our exposure to such
liability. Such measures may require that we spend substantial resources or
discontinue some product or service offerings. Any of these actions could have a
material adverse effect on our business, operating results and financial
condition.

         We carry errors and omissions insurance with a policy limit of $5.0
million, subject to deductibles and exclusions. Such coverage may not be
adequate or available to compensate us for all liability that may be imposed.
The imposition of liability in excess of, or the unavailability of, such
coverage could have a material adverse effect on our business, financial
condition and results of operations.

         The law relating to the regulation and liability of Internet access
providers in relation to information carried or disseminated also is undergoing
a process of development in other countries. Decisions, laws, regulations and
other activities regarding regulation and content liability may significantly
affect the development and profitability of companies offering on-line and
Internet access services, including us.

FCC REGULATIONS MAY LIMIT THE SERVICES WE CAN OFFER

         Consistent with our growth and acquisition strategy, we are now engaged
in, or will soon be engaged in, activities that subject us to varying degrees of
federal, state and local regulation. The FCC exercises jurisdiction over all
facilities of, and services offered by, telecommunications carriers to the
extent that they involve the provision, origination or termination of
jurisdictionally interstate or international communications. The state
regulatory commissions retain jurisdiction over the same facilities and services
to the extent they involve origination or termination of jurisdictionally
intrastate communications.

         Our Internet operations are not currently subject to direct regulation
by the FCC or any other governmental agency, other than regulations applicable
to businesses generally. However, the FCC has recently indicated that some
services offered over the Internet, such as phone-to-phone Internet protocol
telephony, may be functionally indistinguishable from traditional
telecommunications service offerings and their non-regulated status may have to
be re-examined. We are unable to predict what regulations may be adopted in the
future, or to what extent existing laws and regulations may be found applicable,
or the impact such new or existing laws may have on our business. We can not
assure that new laws or regulations relating to Internet services, or existing
laws found to apply to them, will not have a material adverse effect on us.
Although the FCC has recently decided not to allow local telephone companies to
impose per-minute access charges on Internet service providers, and that
decision has been upheld by the reviewing court, further regulatory and
legislative consideration of this issue is likely. In addition, some telephone
companies are seeking relief through state regulatory agencies. Such rules, if
adopted, would affect our costs of serving dial-up customers and could have a
material adverse effect on our business, financial condition and results of
operations.

         In addition to our Internet activities, we have recently focused
attention on acquiring telecommunications assets and facilities, which is a
regulated activity. Our wholly-owned subsidiary, PSINetworks Company, has
received an international Section 214 authorization from the FCC to provide
global facilities-based and global resale telecommunications services. Our
wholly-owned subsidiary, PSINet Telecom UK Limited, has received an
international facilities license from DTI and

                                      -17-
<PAGE>

OFTEL, the responsible telecommunications regulatory bodies in the United
Kingdom. Currently, the FCC and OFTEL do not closely regulate the charges or
practices of non-dominant carriers, such as our subsidiaries. Nevertheless,
these regulatory agencies have the power to impose more stringent regulatory
requirements on us and to change our regulatory classification, which may
adversely affect our business.

         Our subsidiaries have also received competitive local exchange carrier
certification in New York, Virginia, Colorado and Texas, have applied for
competitive local exchange carrier certification in Maryland and California, and
we are considering the financial, regulatory and operational implications of
becoming a competitive local exchange carrier in other states. As a provider of
domestic basic telecommunications services, particularly competitive local
exchange services, we could become subject to further regulation by the FCC
and/or another regulatory agency, including state and local entities.

         An important issue for competitive local exchange carriers is the right
to receive reciprocal compensation for the transport and termination of Internet
traffic. Most states have required incumbent local exchange carriers to pay
competitive local exchange carriers reciprocal compensation. In October 1998,
the FCC determined that dedicated Digital Subscriber Line service is an
interstate service and properly tariffed at the interstate level. In February
1999, the FCC concluded that at least a substantial portion of dial-up Internet
service provider traffic is jurisdictionally interstate. The FCC also concluded
that its jurisdictional decision does not alter the exemption from access
charges currently enjoyed by Internet service providers. The FCC established a
proceeding to consider an appropriate compensation mechanism for interstate
Internet traffic. Pending the adoption of that mechanism, the FCC saw no reason
to interfere with existing interconnection agreements and reciprocal
compensation arrangements. The FCC order has been appealed. There can be no
assurance that any future court, state regulatory or FCC decision on this matter
will favor our position. An unfavorable result may have an adverse impact on our
potential future revenues as a competitive local exchange carrier, as well as
increasing our costs for PRIs generally.

IF WE EXPERIENCE SYSTEM FAILURE OR SHUTDOWN, WE MAY NOT BE ABLE TO DELIVER
SERVICES

         Our success depends upon our ability to deliver reliable, high-speed
access to the Internet and upon the ability and willingness of our
telecommunications providers to deliver reliable, high-speed telecommunications
service through their networks. Our network, and other networks providing
services to us, are vulnerable to damage or cessation of operations from fire,
earthquakes, severe storms, power loss, telecommunications failures and similar
events, particularly if such events occur within a high traffic location of the
network. We have designed our network to minimize the risk of such system
failure, for instance, with redundant circuits among points-of-presence to allow
traffic rerouting. In addition, we perform lab and field testing before
integrating new and emerging technology into the network, and we engage in
capacity planning. Nonetheless, we cannot assure that we will not experience
failures or shutdowns relating to individual points-of-presence or even
catastrophic failure of the entire network.

         We carry business personal property insurance at both scheduled
locations and unscheduled locations to protect us against losses due to property
damage and business interruption. Such coverage, however, may not be adequate or
available to compensate us for all losses that may occur. In addition, we
generally attempt to limit our liability to customers arising out of network
failures by contractually disclaiming all such liability. In respect of many
services, we have also contractually limited liability to a usage credit based
upon the amount of time that the system was not operational. We cannot assure,
however, that such limitations will be enforceable. In any event, significant or
prolonged system failures or shutdowns could damage our reputation and result in
the loss of customers.


                                      -18-
<PAGE>


ALTHOUGH WE HAVE IMPLEMENTED NETWORK SECURITY MEASURES, OUR NETWORK MAY BE
SUSCEPTIBLE TO VIRUSES, BREAK-INS OR DISRUPTIONS

         We have implemented many network security measures, such as limiting
physical and network access to our routers. Nonetheless, our network's
infrastructure is potentially vulnerable to computer viruses, break-ins and
similar disruptive problems caused by our customers or other Internet users.
Computer viruses, break-ins or other problems caused by third parties could lead
to interruptions, delays or cessation in service to our customers. Furthermore,
such inappropriate use of the Internet by third parties could also potentially
jeopardize the security of confidential information stored in the computer
systems of our customers. This could, in turn, deter potential customers and
adversely affect our existing customer relationships.

         Security problems represent an ongoing threat to public and private
data networks. Attacks upon the security of Internet sites and infrastructure
continue to be reported to organizations such as the CERT Coordination Center at
Carnegie Mellon University, which facilitates responses of the Internet
community to computer security events. Addressing problems caused by computer
viruses, break-ins or other problems caused by third parties could have a
material adverse effect on us.

         The security services that we offer in connection with our customers'
networks cannot assure complete protection from computer viruses, break-ins and
other disruptive problems. Although we attempt to limit contractually our
liability in such instances, the occurrence of such problems may result in
claims against us or liability on our part. Such claims, regardless of their
ultimate outcome, could result in costly litigation and could have a material
adverse effect on our business or reputation or on our ability to attract and
retain customers for our products. Moreover, until more consumer reliance is
placed on security technologies available, the security and privacy concerns of
existing and potential customers may inhibit the growth of the Internet service
industry and our customer base and revenues.

RISK ASSOCIATED WITH DEPENDENCE ON TECHNOLOGY AND WITH PROPRIETARY RIGHTS

         Our success and ability to compete is dependent in part upon our
technology and technical expertise and, to a lesser degree, on our proprietary
rights as well. In order to establish and protect our technology, we rely on a
combination of copyright, trademark and trade secret laws and contractual
restrictions. Nevertheless, we cannot assure that such measures are adequate to
protect our proprietary technology. It may be possible for a third party to copy
or otherwise obtain and use our products or technology without authorization or
to develop similar technology independently. In addition, our products may be
licensed or otherwise utilized in foreign countries where laws may not protect
our proprietary rights to the same extent as do laws in the United States. It is
our policy to require employees and consultants and, when obtainable, suppliers
to execute confidentiality agreements upon the commencement of their
relationships with us. Nonetheless, we cannot assure that these precautions will
be adequate to prevent misappropriation of our technology or that our
competitors will not independently develop technologies that are substantially
equivalent or superior to our technology.

         In addition, we are also subject to the risk of adverse claims and
litigation alleging infringement by us of the intellectual property rights of
others. From time to time, we have received claims that we have infringed other
parties' proprietary rights. While we do not believe that we have infringed the
proprietary rights of other parties, we cannot assure that third parties will
not assert infringement claims in the future with respect to our current or
future products. Such claims may require that we enter into license arrangements
or may result in protracted and costly litigation, regardless of the merits of
such claims. We cannot assure that any necessary licenses will be available or
that, if available, such licenses can be obtained on commercially reasonable
terms.

                                      -19-
<PAGE>


         We have recently introduced new enterprise service offerings, including
value-added, Internet protocol-based enterprise communication services and
xDSL-based Internet access services in limited areas. The failure of these
services to gain market acceptance in a timely manner or at all, or the failure
of xDSL-based services, in particular, to achieve significant market coverage
could have a material adverse effect on our business, financial condition and
results of operations. If we introduce new or enhanced services with
reliability, quality or compatibility problems, it could significantly delay or
hinder market acceptance of such services, which could adversely affect our
ability to attract new customers and subscribers. Our services may contain
undetected errors or defects when first introduced or as enhancements are
introduced. Despite testing by us or our customers, we cannot assure that errors
will not be found in new services after commencement of commercial deployment.
Such errors could result in additional development costs, loss of or delays in
market acceptance, diversion of technical and other resources from our other
development efforts and the loss of credibility with our customers and
subscribers. Any such event could have a material adverse effect on our
business, financial condition and results of operations.

         Additionally, if we are unable to match our network capacity to
customer demand for our services, our network could become congested during
periods of peak customer demand. Such congestion could adversely affect the
quality of service we are able to provide. Conversely, due to the high fixed
cost nature of our infrastructure, if our network is under-utilized, it could
adversely affect our ability to provide cost-efficient services. Our failure to
match network capacity to demand could have a material adverse effect on our
business, financial condition or results of operations.

THE MARKET PRICE AND TRADING VOLUME OF OUR STOCK MAY BE VOLATILE

         The market price and trading volume of our common stock has been and
may continue to be highly volatile. Factors such as variations in our revenue,
earnings and cash flow and announcements of new service offerings, technological
innovations, strategic alliances and/or acquisitions involving our competitors
or price reductions by us, our competitors or providers of alternative services
could cause the market price of our common stock to fluctuate substantially. In
addition, the stock markets recently have experienced significant price and
volume fluctuations that particularly have affected technology-based companies
and resulted in changes in the market prices of the stocks of many companies
that have not been directly related to the operating performance of those
companies. Such broad market fluctuations have adversely affected and may
continue to adversely affect the market price of our common stock.

WE DO NOT ANTICIPATE THAT WE WILL PAY CASH DIVIDENDS ON OUR COMMON STOCK

         We have never declared or paid any cash dividends on our common stock
and do not anticipate paying cash dividends on our common stock in the
foreseeable future. In addition, our debt securities and credit facility contain
limitations on our ability to declare and pay cash dividends.

FORWARD-LOOKING STATEMENTS

         Some of the information contained in this prospectus may contain
forward-looking statements. Such statements can be identified by the use of
forward-looking terminology such as "believes," "expects," "may," "will,"
"should," or "anticipates" or similar words, or by discussions of strategy that
involve risks and uncertainties. These statements may discuss our future
expectations or contain projections of our results of operations or financial
condition or expected benefits to us resulting from acquisitions or
transactions. We cannot assure that the future results indicated, whether
expressed or implied, will be achieved. The risk factors noted in this section
and other factors noted throughout this prospectus, including risks and
uncertainties, could cause our actual results to differ materially from those
contained in any forward-looking statement.


                                      -20-
<PAGE>


                                 USE OF PROCEEDS

         The shares of common stock covered by this prospectus are being offered
by the Selling Shareholder and not by us. Consequently, we will not receive any
proceeds from the sale of these shares. However the shares that may be sold
under the prospectus include shares that the Selling Shareholder may acquire in
the future pursuant to stock options that we have granted to her. In order for
the Selling Shareholder to acquire any such shares, the Selling Shareholder will
be required to pay to us the exercise price specified in her option agreement.
We intend to use any proceeds that we receive from the exercise of such options
for working capital and general corporate purposes.


                                      -21-

<PAGE>


                              SELLING SHAREHOLDER

         The table below sets forth, as of the date of this prospectus or a
subsequent date if amended or supplemented, (a) the name of the Selling
Shareholder and her relationship to PSINet during the past three years; (b) the
number of shares of common stock the Selling Shareholder beneficially owns; (c)
the number of shares of common stock offered pursuant to this prospectus by the
Selling Shareholder; and (d) the amount and percentage of the common stock
outstanding to be held by the Selling Shareholder after giving effect to the
offering of the common stock covered by this prospectus. The information
contained in this table may be amended or supplemented from time to time.


<TABLE>

<CAPTION>
                                                  Shares                                 Shares Beneficially
                     Relationship              Beneficially            Shares            Owned After Offering
Name                  to PSINet                   Owned              Offered Hereby    ------------------------
                                                                                        Number        Percentage
----                 -------------              -----------          --------------     ------        ----------


<S>                  <C>                           <C>                  <C>             <C>               <C>
Susan DiSesa         Former Consultant             9,825                9,825           - 0 -             0 %

</TABLE>


                                      -22-
<PAGE>


                              PLAN OF DISTRIBUTION

         Any of or all of the shares may be sold from time to time to purchasers
directly by the Selling Shareholder. Alternatively, the Selling Shareholder may
from time to time offer the shares through underwriters, dealers or agents who
may receive compensation in the form of discounts, concessions or commissions
from the Selling Shareholder and/or the purchasers of shares for whom they may
act. The Selling Shareholder and any such underwriters, dealers or agents that
participate in the distribution of Shares may be deemed to be underwriters under
the Securities Act of 1933, as amended (the "Securities Act"). Any profit on the
sale of the shares by them and any discounts, commissions or concessions
received by them may be deemed to be underwriting discounts and commissions
under the Securities Act. To the extent required, at the time a particular offer
of shares is made, a supplement to this prospectus will be distributed which
will set forth the number of shares being offered and the terms of the offering.
These terms will include the name or names of any underwriters, dealers or
agents, any discounts, commissions and other items constituting compensation
from the Selling Shareholder and any discounts, commissions or concessions
allowed or reallowed or paid to dealers, including the proposed selling price to
the public.

         The shares may be sold from time to time in one or more transactions at
a fixed offering price, which may be changed, or at varying prices determined at
the time of sale or at negotiated prices.

         In order to comply with certain states' securities laws, if applicable,
the shares will be sold in such jurisdictions only through registered or
licensed brokers or dealers. In certain states the shares may not be sold unless
the shares have been registered or qualified for sale in such state or an
exemption from registration or qualification is available and is met.

                                 LEGAL MATTERS

         The validity of the securities offered hereby will be passed upon by
Nixon Peabody LLP, New York, New York, counsel for PSINet. Certain attorneys
with Nixon Peabody LLP currently own in the aggregate less than one percent of
our common stock.

                                    EXPERTS

         The consolidated financial statements of PSINet Inc. as of December 31,
1998 and 1997 and for each of the three years in the period ended December 31,
1998 incorporated by reference in this prospectus have been so incorporated in
reliance on the report of PricewaterhouseCoopers LLP, independent accountants,
given on the authority of said firm as experts in auditing and accounting.

                      DOCUMENTS INCORPORATED BY REFERENCE

         The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this prospectus, and information that we file later with
the SEC will automatically update and supersede this information. We are
incorporating by reference in this prospectus the following documents:

         1. Our annual report on Form 10-K for our fiscal year ended December
31, 1998. This report contains:

           *   audited  consolidated  balance sheets for us and our
               subsidiaries as of  December 31,  1998 and 1997


                                      -23-
<PAGE>


           *   related consolidated statements of operations, of changes
               in shareholders' equity and of cash flows for the years
               ended December 31, 1998, 1997 and 1996

         2. Our quarterly report on Form 10-Q for the three month period ended
March 31, 1999.

         3. Our current reports on Form 8-K dated

           *   July 31, 1997 (solely insofar as it relates to our
               Shareholder Rights Agreement dated May 8, 1996, as
               amended)

           *   August 20, 1997

         4. Our registration statement on Form 8-A dated April 7, 1995, as
amended (registration no. 0-25812)

         5. Our registration statement on Form 8-A dated June 4, 1996, as
amended (registration no. 0-25812)

         We are also incorporating by reference in this prospectus all reports
and other documents that we file after the date of this prospectus pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, prior
to the termination of the offering of securities under this prospectus. These
reports and documents will be incorporated by reference in and considered to be
a part of this prospectus as of the date of filing of such reports and
documents.

         Any statement contained in this prospectus or in a document which is
incorporated by reference herein will be modified or superseded for purposes of
this prospectus to the extent that a statement in any document that we file
after the date of this prospectus that also is incorporated by reference herein
modifies or supersedes such prior statement. Any such statement so modified or
superseded will not, except as so modified or superseded, constitute a part of
this prospectus.

         This prospectus incorporates by reference documents which are not
presented in this prospectus or delivered to you with it. You may request, and
we will send to you, without charge, copies of these documents, other than
exhibits to these documents, which we will send to you for a reasonable fee.
Requests should be directed to the Office of the Secretary, PSINet Inc., 510
Huntmar Park Drive, Herndon, Virginia 20170 (telephone (703) 904-4100).



                      WHERE YOU CAN FIND MORE INFORMATION

         We file annual, quarterly and special reports, proxy statements and
other information with the SEC. You may read and copy materials that we have
file with the SEC, including the registration statement, at the following SEC
public reference rooms:

   Judiciary Plaza          7 World Trade Center         Northwest Atrium Center
450 Fifth Street, N.W.           Suite 1300              500 West Madison Street
      Room 1024           New York, New York 10048             Suite 1400
 Washington, DC 20549                                    Chicago, Illinois 60661

         You can also obtain copies of filed documents, at prescribed rates, by
mail from the Public Reference Section of the SEC at its Judiciary Plaza
location, listed above, or by telephone at 1-800-SEC-0330 or electronically
through the SEC's Web Site at http://www.sec.gov.


                                      -24-
<PAGE>

         Our common stock is listed on the Nasdaq Stock Market's National Market
under the symbol "PSIX," and our SEC filings can also be read and obtained at
the following Nasdaq address:

                             The Nasdaq Stock Market
                                 Reports Section
                               1735 K Street, N.W.
                             Washington, D.C. 20006

         We furnish our stockholders with annual reports containing our audited
financial statements and with proxy material for our annual meetings complying
with the proxy requirements of the Securities Exchange Act of 1934.

                      DISCLOSURE OF COMMISSION POSITION ON
                 INDEMNIFICATION FOR SECURITIES ACT LIABILITIES

         Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers, and controlling persons of
PSInet pursuant to the foregoing provisions, PSINet has been informed that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act of 1933 and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by registrant of expenses incurred in
the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, registrant will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act of 1933 and will be governed by the
final adjudication of such issue.

         Except to the extent set forth herein, there is no charter provision,
by-law, contract, arrangement or statute pursuant to which any director or
officer of registrant is indemnified in any manner against any liability which
he may incur in his capacity as such.


                                      -25-
<PAGE>


                                    PART II.

               INFORMATION REQUIRED IN THE REGISTRATION STATEMENT

ITEM 8.  Exhibits

5.1              Opinion of Nixon Peabody LLP

23.1             Consent of PricewaterhouseCoopers LLP

23.2             Consent of Nixon Peabody LLP (filed as part of Exhibit 5.1)

24.1             Power of Attorney (included on the signature page of this
                 registration statement)






                                      -26-
<PAGE>



                                   SIGNATURES


         Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of Herndon, Commonwealth of Virginia on July 9, 1999.

                                   PSINET INC.



                                   By:     /s/  William L. Schrader
                                      ----------------------------------
                                           William L. Schrader, Chairman
                                            and Chief Executive Officer


                                POWER OF ATTORNEY

         KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints William L. Schrader, Harold S.
Wills, David N. Kunkel, Edward D. Postal, Michael J. Malesardi and Kathleen B.
Horne, and each or any of them, his true and lawful attorney-in-fact and agent,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to sign any registration statement
filed pursuant to Rule 462(b) under the Securities Act of 1933 and any and all
amendments (including post-effective amendments) to this registration statement
and to any registration statement filed pursuant to Rule 462(b), and to file
same, with all exhibits thereto and, other documents in connection therewith,
with the Securities and Exchange Commission, granting unto each said
attorney-in-fact and agent full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
foregoing, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and agent
or either of them, or their or his substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.

         Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.

        Name                           Title                                Date

/s/ William L. Schrader         Chairman, Chief Executive           July 9, 1999
-----------------------           Officer and Director
William L. Schrader           Principal Executive Officer)

/s/ Harold S. Wills             President, Chief Operating          July 9, 1999
--------------------                Officer and Director
Harold S. Wills


/s/ David N. Kunkel             Executive Vice President,           July 9, 1999
--------------------          General Counsel and Director
David N. Kunkel


                                      -27-
<PAGE>

/s/ Edward D. Postal            Senior Vice President and Chief     July 9, 1999
---------------------             Financial Officer (Principal
Edward D. Postal                     Financial Officer)



/s/ Michael J. Malesardi        Vice President and Controller       July 9, 1999
-------------------------      (Principal Accounting Officer)
Michael J. Malesardi


/s/ William H. Baumer                   Director                    July 9, 1999
----------------------
William H. Baumer


/s/ Ralph J. Swett                      Director                    July 9, 1999
-----------------
Ralph J. Swett


/s/ Ian P. Sharp                         Director                   July 9, 1999
-----------------
Ian P. Sharp


                                      -28-
[{"type": "S-8", "sequence": "1", "description": "REGISTRATION STATEMENT ON FORM S-8", "secsgml_size_bytes": 90178}]
{"company-data": {"conformed-name": "PSINET INC", "cik": "0000940716", "assigned-sic": "7370", "irs-number": "161353600", "state-of-incorporation": "NY", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "S-8", "act": "33", "file-number": "333-82811", "film-number": "99664041"}, "business-address": {"street1": "510 HUNTMAR PARK DR", "city": "HERNDON", "state": "VA", "zip": "20170", "phone": "7039044100"}, "mail-address": {"street1": "510 HUNTMAR PARK DRIVE", "city": "HERNDON", "state": "VA", "zip": "22070"}, "former-company": {"former-conformed-name": "PERFORMANCE SYSTEMS INTERNATIONAL INC /NY/", "date-changed": "19950309"}}
As filed with the Securities and Exchange Commission on July 14, 1999
                                                    Registration No.  333 -
--------------------------------------------------------------------------------

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                  -------------

                                    FORM S-8
                             REGISTRATION STATEMENT
                                      UNDER
                           THE SECURITIES ACT OF 1933
                                  -------------
                                   PSINET INC.
             (Exact name of registrant as specified in its charter)

           New York                                               16-1353600
(State or other jurisdiction of                                (I.R.S. Employer
incorporation or organization)                               Identification No.)

510 Huntmar Park Drive, Herndon, Virginia                           20170
(Address of principal executive offices)                          (Zip Code)

                         EXECUTIVE STOCK INCENTIVE PLAN
                         STRATEGIC STOCK INCENTIVE PLAN
              OPTION AGREEMENT BETWEEN REGISTRANT AND SUSAN DISESA
                            (Full title of the plans)

                              David N. Kunkel, Esq.
                  Executive Vice President and General Counsel
                                   PSINet Inc.
                 510 Huntmar Park Drive, Herndon, Virginia 20170
                     (Name and address of agent for service)

                                 (703) 904-4100
          (Telephone number, including area code, of agent for service)
                                  -------------

                                    Copy to:
                           Richard F. Langan, Jr. Esq.
                                Nixon Peabody LLP
                  437 Madison Avenue, New York, New York 10022
           Telephone No.: (212) 940-3140/Facsimile No.: (212) 940-3111
                                  -------------

---------------------------------------------------------------------------------------------------------------------

                                                  CALCULATION OF REGISTRATION FEE
-------------------------------- -------------------- -------------------- ---------------------- -------------------
Proposed maximum      Proposed maximum
      Title of securities           Amount to be        offering price      aggregate offering        Amount of
       to be registered            registered (1)        per share (2)           price(2)          registration fee
-------------------------------- -------------------- -------------------- ---------------------- -------------------
Common Stock, $.01 par value     2,809,825 shares     $56.625              $159,106,340           $44,232
-------------------------------- -------------------- -------------------- ---------------------- -------------------
(1) Represents (i) 1,800,000 shares issuable upon the exercise of
options granted or to be granted under the Executive Stock Incentive Plan, (ii)
1,000,000 shares issuable upon the exercise of options granted or to be granted
under the Strategic Stock Incentive Plan, (iii) 9,825 shares issuable upon the
exercise of options granted under the Susan DiSesa option agreement, and (iv)
pursuant to Rule 416(a) of the Securities Act of 1933, such indeterminate number
of shares as may be issued by reason of any stock split, stock dividend,
recapitalization or similar transaction effected without the receipt of
consideration which results in an increase in our number of outstanding shares
of common stock.

         (2) Estimated in accordance with Rule 457(c) under the Securities Act
of 1933 solely for the purpose of calculating the registration fee. The
computation is based upon the average of the high and low prices of our common
stock as reported on the Nasdaq Stock Market's National Market on July 9, 1999.
PART I.

                  INFORMATION REQUIRED IN THE 10(a) PROSPECTUS

                                EXPLANATORY NOTE

         At our 1999 Annual Meeting of Shareholders held on May 17, 1999, our
shareholders approved amendments to our Executive Stock Incentive Plan and our
Strategic Stock Incentive Plan to increase the number of shares available for
issuance under each of the plans. This registration statement on Form S-8
relates to up to 1,800,000 additional shares of our common stock, par value $.01
per share, issuable pursuant to our Executive Stock Incentive Plan and up to
1,000,000 additional shares of our common stock issuable pursuant to our
Strategic Stock Incentive Plan. Accordingly, pursuant to Instruction E to SEC
Form S-8, the contents of the following earlier registration statements are
incorporated herein by reference: (1) Registration Statement on Form S-8,
relating to our Executive Stock Incentive Plan (No. 33-99464); and (2)
Registration Statement on Form S-8, relating to our strategic Stock Incentive
Plan (No. 33-99470).

         This registration statement also relates to 9,825 shares of our common
stock that may be issued to Susan DiSesa, upon the exercise of options granted
to her under an option agreement.

         The reoffer prospectus included herein is intended to register for
reoffer and/or resale 9,825 shares of our common stock that may be issued to Ms.
DiSesa upon the exercise of options granted to her under an option agreement.

                                      -2-
REOFFER PROSPECTUS

                                   PSINET INC.
                          9,825 SHARES OF COMMON STOCK

         This prospectus relates to the offering of up to 9,825 shares of our
common stock which may be sold from time to time in one or more transactions by
Susan DiSesa, a former consultant of one of our subsidiaries. Ms. DiSesa is also
referred to as the "Selling Shareholder." We will not receive any of the
proceeds from the sale of these shares.

         The Selling Shareholder will sell the shares offered hereby at prices
which are current when the sales take place or at other prices upon which the
parties agree. The Selling Shareholder may or may not use brokers and dealers in
these transactions, but will pay brokerage fees or commissions, if relevant. We
will pay all of the expenses associated with the registration of the shares and
this prospectus.

         Our common stock is listed for trading on the Nasdaq Stock Market's
National Market under the symbol "PSIX." On July 9, 1999, the last reported sale
price of our common stock was $58.75.

                  --------------------------------------------

   INVESTMENT IN OUR COMMON STOCK INVOLVES RISK. SEE "RISK FACTORS" BEGINNING
                         ON PAGE 6 OF THIS PROSPECTUS.

     NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
           COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES, OR
             DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE.
            ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

                  --------------------------------------------

                  The date of this prospectus is July 14, 1999

                                      -3-
TABLE OF CONTENTS

                                                                            Page

The Company....................................................................5
Risk Factors...................................................................6
Use of Proceeds...............................................................21
Selling Shareholder...........................................................22
Plan of Distribution..........................................................23
Legal Matters.................................................................23
Experts.......................................................................23
Documents Incorporated by Reference...........................................23
Where You Can Find More Information...........................................24
Disclosure of Commission Position on Indemnification
for Securities Act Liabilities................................................25

                                      -4-
PROSPECTUS SUMMARY

         THIS SUMMARY HIGHLIGHTS SOME INFORMATION FROM THIS PROSPECTUS. BECAUSE
THIS IS A SUMMARY, IT MAY NOT CONTAIN ALL OF THE INFORMATION THAT MAY BE
IMPORTANT TO YOU. YOU SHOULD READ THE ENTIRE PROSPECTUS, INCLUDING THE RISK
FACTORS BEFORE MAKING AN INVESTMENT DECISION.

         We are a leading global provider of Internet solutions to businesses.
We provide Internet connectivity and Web hosting services to customers in 90 of
the 100 largest metropolitan statistical areas in the U.S. and in 14 of the 20
largest global telecommunications markets. In addition to these services, we
also offer a suite of value-added products and services that are designed to
enable our customers to maximize utilization of the Internet to more efficiently
communicate with their customers, suppliers, business partners and remote office
locations. We conduct our business through operations organized into four
geographic operating segments--the U.S., Canada, Latin America, Europe and Asia.
Our services and products include access services that offer dedicated, dial-up,
wireless and digital subscriber line or xDSL connections, Web hosting services,
intranets, virtual private networks or VPNs, electronic commerce or e-commerce,
voice-over-IP, e-mail and managed security services. We also provide wholesale
and private label network connectivity and related services to other Internet
service providers, known as ISPs, and telecommunications carriers to further
utilize our network capacity.

         We operate one of the largest global commercial data communications
networks. Our Internet-optimized network has a footprint that extends around the
globe and is connected to approximately 525 sites, called points of presence or
POPs, situated throughout the U.S., Canada, Latin America, Europe and Asia that
enable our customers to connect to the Internet. Our network reach allows our
customers' employees to access their corporate network and systems resources
through local calls in over 150 countries. Our network architecture consists of
high capacity frame relay switches and routing and is compatible with all of the
most widely deployed transmission technologies. We further expand the reach of
our network by connecting with other large ISPs at 137 points through 67
contractual arrangements, called peering agreements, that permit the exchange of
information between our network and the networks of our peering partners. We
have recently opened three global Internet hosting facilities in the U.S.,
Switzerland and Canada containing a total of approximately 25,000 square feet
and are currently constructing additional data center capacity in London and New
York containing a total of approximately 61,000 square feet. We have two network
operating centers that monitor and manage network traffic 24-hours per day,
seven-days per week.

         Our mission is to build a premier Internet protocol-based
communications company. We have grown by using multiple sales channels,
including direct sales and resellers, and by acquiring other ISPs and related
businesses in key markets. We have increased revenues by providing services and
products that enhance our customers' business processes by helping them to
effectively use the Internet and related tools. We served, as of March 31, 1999,
approximately 59,700 business accounts, including 196 ISPs.

         We are a New York corporation and our principal executive offices are
located at 510 Huntmar Park Drive, Herndon, Virginia 20170. Our telephone number
is (703) 904-4100.

                                      -5-
RISK FACTORS

         BEFORE YOU INVEST IN OUR SECURITIES, YOU SHOULD BE AWARE THAT THERE ARE
VARIOUS RISKS, INCLUDING THE ONES LISTED BELOW. YOU SHOULD CAREFULLY CONSIDER
THESE RISK FACTORS, AS WELL AS THE OTHER INFORMATION CONTAINED IN THIS
PROSPECTUS, IN EVALUATING AN INVESTMENT IN OUR SECURITIES.

WE HAVE SIGNIFICANT INDEBTEDNESS AND WE MAY NOT BE ABLE TO MEET OUR OBLIGATIONS

         We are highly leveraged and have significant debt service requirements.
As of March 31, 1999, our total indebtedness was $1.28 billion, representing
116% of total capitalization, and our interest expense for the year ended
December 31, 1998 and the three months ended March 31, 1999 was $63.9 million
and $29.6 million, respectively.

         Our high level of indebtedness could have several important effects on
our future operations, which, in turn, could have important consequences for the
holders of our securities, including the following:

           *  a substantial portion of our cash flow from operations must be
              used to pay interest on our indebtedness and, therefore, will not
              be available for other business purposes;

           *  covenants contained in the agreements evidencing our debt
              obligations require us to meet many financial tests, and other
              restrictions limit our ability to borrow additional funds or to
              dispose of assets and may affect our flexibility in planning for,
              and reacting to, changes in our business, including possible
              acquisition activities and capital expenditures; and

           *  our ability to obtain additional financing in the future for
              working capital, capital expenditures, acquisitions, general
              corporate purposes or other purposes may be impaired.

         Our ability to meet our debt service obligations and to reduce our
total indebtedness depends on our future operating performance and on economic,
financial, competitive, regulatory and other factors affecting our operations.
Many of these factors are beyond our control and our future operating
performance could be adversely affected by some or all of these factors. We
historically have been unable to generate sufficient cash flow from operations
to meet our operating needs and have relied on equity, debt and capital lease
financings to fund our operations. However, based on our current level of
operations, management believes that existing working capital, existing credit
facilities, capital lease financings and proceeds of future equity or debt
financings will be adequate to meet our presently anticipated future
requirements for working capital, capital expenditures and scheduled payments of
interest on our debt. We cannot assure, however, that our business will generate
sufficient cash flow from operations or that future working capital borrowings
will be available in an amount sufficient to enable us to service our debt or to
make necessary capital expenditures. In addition, we cannot assure that we will
be able to raise additional capital for any refinancing of our debt in the
future.

WE HAVE EXPERIENCED CONTINUING LOSSES, NEGATIVE CASH FLOW AND FLUCTUATIONS IN
OPERATING RESULTS

         Our prospects must be considered in light of the risks, expenses and
difficulties frequently encountered by companies in new and rapidly evolving
markets. To address these risks, we must, among other things, respond to
competitive developments, continue to attract and retain qualified persons, and
continue to upgrade our technologies and commercialize our network services
incorporating such technologies. We cannot assure that we will be successful in
addressing such risks, and the failure to do so could have a material adverse
effect on our business, financial condition, results of operations and ability
to pay when due principal, interest and other amounts in respect of our debt.
Although we have experienced revenue growth on an annual basis with revenue
increasing from $84.4 million in 1996 to

                                      -6-
$121.9 million in 1997 to $259.6 million in 1998, we have incurred losses and
experienced negative earnings before interest expense and interest income,
taxes, depreciation and amortization, other income and expense, and charge for
acquired in-process research and development ("EBITDA") during each of such
periods. We expect to continue to operate at a net loss and experience negative
EBITDA in the near term as we continue our acquisition program and the expansion
of our global network operations. We have incurred net losses available to
common shareholders of $55.1 million, $46.0 million and $264.9 million and have
incurred negative EBITDA of $28.0 million, $21.2 million and $42.1 million for
each of the years ended December 31, 1996, 1997 and 1998, respectively. During
the three months ended March 31, 1999, we incurred net losses available to
common shareholders of $59.3 million and negative EBITDA of $6.8 million. At
March 31, 1999, we had an accumulated deficit of $486.9 million. We cannot
assure that we will be able to achieve or sustain profitability or positive
EBITDA.

         Our operating results have fluctuated in the past and may fluctuate
significantly in the future as a result of a variety of factors, some of which
are outside our control. These factors, include, among others:

           *   general economic conditions and specific economic conditions in
               the Internet access industry;

           *   user demand for Internet services;

           *   capital expenditures and other costs relating to the expansion of
               operations of our network;

           *   the introduction of new services by us or our competitors;

           *   the mix of services sold and the mix of channels through which
               those services are sold;

           *   pricing changes and new product introductions by us and our
               competitors;

           *   delays in obtaining sufficient supplies of sole or limited source
               equipment and telecom facilities; and

           *   potential adverse regulatory developments.

         As a strategic response to a changing competitive environment, we may
elect from time to time to make pricing, service or marketing decisions that
could have a material adverse effect on our business, results of operations and
cash flow.

WE ARE PARTIALLY DEPENDENT ON OUR SUBSIDIARIES FOR REPAYMENT OF DEBT

         We are an operating entity which also conducts a significant portion of
our business through our subsidiaries. Our cash flow from operations and
consequently our ability to service our debt, including our 10% senior notes and
11 1/2% senior notes, is therefore partially dependent upon our subsidiaries'
earnings and their distributions of those earnings to us. It may also be
dependent upon loans, advances or other payments of funds to us by those
subsidiaries. Our subsidiaries have no obligation, contingent or otherwise, to
make any funds available to us for payment of the principal of or interest on
many of our debt obligations, including our 10% senior notes and 11 1/2% senior
notes. Our subsidiaries' ability to make payments may be subject to the
availability of sufficient surplus funds, the terms of such subsidiaries'
indebtedness, applicable laws and other factors.

         Our subsidiaries' creditors will have priority to the assets of such
subsidiaries over the claims of PSINet and the holders of our indebtedness. One
exception is that if such subsidiaries have provided guarantees of our
indebtedness and if loans made by us to our subsidiaries are recognized as
indebtedness, they will not have such priorities. In any event, our 10% senior
notes and 11 1/2% senior notes are effectively subordinated in right of payment
to all existing and future indebtedness and other liabilities of our
subsidiaries, including trade payables. As of March 31, 1998, our subsidiaries
had approximately $181.1 million of total liabilities, including trade payables
and accrued liabilities, to which holders of our

                                      -7-
10% senior notes and 11 1/2% senior notes are structurally subordinated. Under
the terms of agreements evidencing our debt obligations, some of our
subsidiaries are restricted in their ability to incur debt in the future.

WE MAY NOT BE ABLE TO FUND THE EXPANSION WE WILL NEED TO REMAIN COMPETITIVE

         In order to maintain our competitive position and continue to meet the
increasing demands for service quality, availability and competitive pricing, we
expect to make significant capital expenditures. At March 31, 1999, we were
obligated to make future payments that total $99.5 million for acquisitions of
global fiber-based telecommunications bandwidth, including indefeasible rights
of use or other rights. We also expect that there will be additional costs, such
as connectivity and equipment charges, in connection with taking full advantage
of such acquired bandwidth and indefeasible rights of use. Although we are
currently unable to estimate the extent of such additional costs, we currently
anticipate that our capital expenditures in 1999 will be consistent with those
in 1998.

         We historically have been unable to generate sufficient cash flow from
operations to meet our operating needs and have relied on equity, debt and
capital lease financings to fund our operations. However, we believe that we
will have a reasonable degree of flexibility to adjust the amount and timing of
these capital expenditures in response to market conditions, competition, our
then-existing financing capabilities and other factors. We also believe that
working capital generated from the use of acquired bandwidth, together with
other existing working capital, existing credit facilities, capital lease
financings and proceeds of future equity or debt financings will be sufficient
to meet the presently anticipated working capital and capital expenditure
requirements of our operations.

         We may need to raise additional funds in order to take advantage of
unanticipated opportunities, more rapid international expansion or acquisitions
of complementary businesses. In addition, we may need to raise additional funds
to develop new products or otherwise respond to changing business conditions or
unanticipated competitive pressures. We cannot assure that we will be able to
raise such funds on favorable terms. In the event that we are unable to obtain
such additional funds on acceptable terms, we may determine not to enter into
various expansion opportunities.

WE FACE RISKS ASSOCIATED WITH ACQUISITIONS AND STRATEGIC ALLIANCES RELATING TO
DIFFICULTIES IN INTEGRATING COMBINED OPERATIONS, INCURRENCE OF ADDITIONAL DEBT
TO FINANCE ACQUISITIONS AND OPERATIONS OF ACQUIRED BUSINESSES, POTENTIAL
DISRUPTION OF OPERATIONS AND RELATED NEGATIVE IMPACT ON EARNINGS, AND INCURRENCE
OF SUBSTANTIAL EXPENSES THAT COULD ADVERSELY AFFECT OUR FINANCIAL CONDITION

         Growth through acquisitions represents a principal component of our
business strategy. Over the 19 months ended April 30, 1999, we acquired 22
Internet service providers in ten of the 20 largest global telecommunications
markets. We expect to continue to acquire assets and businesses principally
relating to or complementary to our current operations. We may also seek to
develop strategic alliances both domestically and internationally. Any such
future acquisitions or strategic alliances would be accompanied by the risks
commonly encountered in acquisitions or strategic alliances. Such risks include,
among other things:

           *   the difficulty of integrating the operations and personnel of the
               companies;

           *   the potential disruption of our ongoing business;

           *   the inability of management to maximize our financial and
               strategic position by the successful incorporation of licensed or
               acquired technology and rights into our service offerings; and

                                      -8-
*   the inability to maintain uniform standards, controls, procedures
               and policies and the impairment of relationships with employees
               and customers as a result of changes in management.

         We cannot assure that we will be successful in overcoming these risks
or any other problems encountered in connection with such acquisitions or
strategic alliances. We believe that after eliminating redundant network
architecture and administrative functions and taking other actions to integrate
the operations of acquired companies we will be able to realize cost savings.
However, we cannot assure that our integration of acquired companies' operations
will be successfully accomplished. Our inability to improve the operating
performance of acquired companies' businesses or to integrate successfully the
operations of acquired companies could have a material adverse effect on our
business, financial condition and results of operations. In addition, as we
proceed with acquisitions in which the consideration consists of cash, a
substantial portion of our available cash will be used to consummate such
acquisitions.

         As with each of our recent acquisitions, the purchase price of many of
the businesses that might become attractive acquisition candidates for us likely
will significantly exceed the fair values of the net assets of the acquired
businesses. As a result, material goodwill and other intangible assets would be
required to be recorded which would result in significant amortization charges
in future periods. In addition, an intangible asset that frequently arises in
connection with the acquisition of a technology company is "acquired in-process
research and development," which under U.S. accounting standards, as presently
in effect, must be expensed immediately upon acquisition. Such expenses, in
addition to the financial impact of such acquisitions, could have a material
adverse effect on our business, financial condition and results of operations
and could cause substantial fluctuations in our quarterly and yearly operating
results. Furthermore, in connection with acquisitions or strategic alliances, we
could incur substantial expenses, including the expenses of integrating the
business of the acquired company or the strategic alliance with our existing
business.

         We expect that competition for appropriate acquisition candidates may
be significant. We may compete with other telecommunications companies with
similar acquisition strategies, many of which may be larger and have greater
financial and other resources than we have. Competition for Internet companies
is based on a number of factors including price, terms and conditions, size and
access to capital, ability to offer cash, stock or other forms of consideration
and other matters. We cannot assure that we will be able to successfully
identify and acquire suitable companies on acceptable terms and conditions.

OUR  GROWTH AND  EXPANSION  MAY STRAIN OUR  ABILITY TO MANAGE OUR  OPERATIONS
AND OUR  FINANCIAL RESOURCES

         Our rapid growth has placed a strain on our administrative, operational
and financial resources and has increased demands on our systems and controls.
We have approximately 525 points-of-presence and we plan to continue to expand
the capacity of existing points-of-presence as customer-driven demand dictates.
In addition, we have completed a number of acquisitions of companies and
telecommunications bandwidth during 1998 and plan to continue to do so. We
anticipate that our Carrier and Internet Service Provider Services business
unit, as well as other business growth, may require continued enhancements to
and expansion of our network. The process of consolidating the businesses and
implementing the strategic integration of these acquired businesses with our
existing business may take a significant amount of time. It may also place
additional strain on our resources and could subject us to additional expenses.
We cannot assure that we will be able to integrate these companies successfully
or in a timely manner. In addition, we cannot assure that our existing operating
and financial control systems and infrastructure will be adequate to maintain
and effectively monitor future growth.

                                      -9-
Our continued growth may also increase our need for qualified
personnel. We cannot assure that we will be successful in attracting,
integrating and retaining such personnel. The following risks, associated with
our growth, could have a material adverse effect on our business, results of
operations and financial condition:

           *   our inability to continue to upgrade our networking systems or
               our operating and financial control systems;

           *   our inability to recruit and hire necessary personnel or to
               successfully integrate new personnel into our operations;

           *   our inability to successfully integrate the operations of
               acquired companies or to manage our growth effectively; or

           *   our inability to adequately respond to the emergence of
               unexpected expansion difficulties.

WE FACE RISKS ASSOCIATED WITH OUR ACQUISITIONS OF BANDWIDTH FROM NETWORK
SUPPLIERS, INCLUDING OUR STRATEGIC ALLIANCE WITH IXC COMMUNICATIONS INC.,
RELATING TO OUR DEPENDENCE ON THEIR ABILITY TO SATISFY THEIR OBLIGATIONS TO US,
THE POSSIBILITY THAT WE MAY NEED TO INCUR SIGNIFICANT EXPENSES TO UTILIZE
BANDWIDTH AND THEIR ABILITY TO BUILDOUT THEIR NETWORKS UNDER CONSTRUCTION THAT
COULD ADVERSELY AFFECT OUR ABILITY TO UTILIZE ACQUIRED BANDWIDTH

         We are subject to a variety of risks relating to our recent
acquisitions of fiber-based telecommunications bandwidth from our various global
network suppliers, including our strategic alliance with IXC Communications
Inc., and the delivery, operation and maintenance of such bandwidth. Such risks
include, among other things, the following:

           *   the risk that financial, legal, technical and/or other matters
               may adversely affect such suppliers' ability to perform their
               respective operation, maintenance and other services relating to
               such bandwidth, which may adversely affect our use of such
               bandwidth;

           *   the risk that we will not have access to sufficient additional
               capital and/or financing on satisfactory terms to enable us to
               make the necessary capital expenditures to take full advantage of
               such bandwidth;

           *   the risk that such suppliers may not continue to have the
               necessary financial resources to enable them to complete, or may
               otherwise elect not to complete, their contemplated buildout of
               their respective fiber optic telecommunications systems; and

           *   the risk that such buildout may be delayed or otherwise adversely
               affected by presently unforeseeable legal, technical and/or other
               factors.

         We cannot assure that we will be successful in overcoming these risks
or any other problems encountered in connection with our acquisitions of
bandwidth.

INTERNATIONAL EXPANSION IS A KEY COMPONENT OF OUR BUSINESS STRATEGY AND, IF WE
ARE UNABLE TO COMPLETE THIS EXPANSION, OUR FINANCIAL CONDITION MAY BE ADVERSELY
AFFECTED

         A key component of our business strategy is our continued expansion
into international markets. We may need to enter into joint ventures or other
strategic relationships with one or more third parties in order to conduct our
foreign operations successfully. However, we cannot assure that we will be able
to obtain the permits and operating licenses required for us to operate, to hire
and train employees or to market, sell and deliver high quality services in
these markets. In addition to the uncertainty as to our

                                      -10-
ability to continue to expand our international presence, there are risks
inherent in doing business on an international level. Such risks include:

           *   unexpected changes in or delays resulting from regulatory
               requirements, tariffs, customs, duties and other trade barriers;

           *   difficulties in staffing and managing foreign operations;

           *   longer payment cycles and problems in collecting accounts
               receivable;

           *   fluctuations in currency exchange rates and foreign exchange
               controls which restrict or prohibit repatriation of funds;

           *   technology export and import restrictions or prohibitions;

           *   delays from customs brokers or government agencies;

           *   seasonal reductions in business activity during the summer months
               in Europe and other parts of the world; and

           *   potentially adverse tax consequences, which could adversely
               impact the success of our international operations.

         We cannot assure that such factors will not have an adverse effect on
our future international operations and, consequently, on our business,
financial condition and results of operations. In addition, we cannot assure
that laws or administrative practice relating to taxation, foreign exchange or
other matters of countries within which we operate will not change. Any such
change could have a material adverse effect on our business, financial condition
and results of operations.

         In particular, we have also recently made significant investments in
Japan, which is currently experiencing a severe economic recession. Other
Asian-Pacific countries in which we operate are also experiencing economic
difficulties and uncertainties. These economic difficulties and uncertainties
could have a material adverse effect on our business, financial condition and
results of operations.

WE DEPEND ON KEY PERSONNEL AND COULD BE AFFECTED BY THE LOSS OF THEIR SERVICES

         Competition for qualified employees and personnel in the Internet
services industry is intense and there are a limited number of persons with
knowledge of and experience in the Internet service industry. The process of
locating such personnel with the combination of skills and attributes required
to carry out our strategies is often lengthy. Our success depends to a
significant degree upon our ability to attract and retain qualified management,
technical, marketing and sales personnel and upon the continued contributions of
such management and personnel. In particular, our success is highly dependent
upon the personal abilities of our senior executive management, including
William L. Schrader, our Chairman of the Board and Chief Executive Officer and
the founder of PSINet, Harold S. Wills, our President and Chief Operating
Officer, and Edward D. Postal, our Senior Vice President and Chief Financial
Officer. We have employment agreements with Messrs. Wills and Postal. The loss
of the services of any one of them could have a material adverse effect on our
business, financial condition or results of operations.

WE DEPEND ON SUPPLIERS AND COULD BE AFFECTED BY CHANGES IN SUPPLIERS OR DELAYS
IN DELIVERY OF THEIR PRODUCTS AND SERVICES

         We have few long-term contracts with our suppliers. We are dependent on
third party suppliers for our leased-line connections or bandwidth. Some of
these suppliers are or may become competitors of ours, and such suppliers are
not subject to any contractual restrictions upon their ability to compete with
us. If these suppliers change their pricing structures, we may be adversely
affected. Moreover, any

                                      -11-
failure or delay on the part of our network providers to deliver bandwidth to us
or to provide operations, maintenance and other services with respect to such
bandwidth in a timely or adequate fashion could adversely affect us.

         We are also dependent on third party suppliers of hardware components.
Although we attempt to maintain a minimum of two vendors for each required
product, some components used by us in providing our networking services are
currently acquired or available from only one source. We have from time to time
experienced delays in the receipt of hardware components and telecommunications
facilities, including delays in delivery of PRI telecommunications facilities,
which connect dial-up customers to our network. A failure by a supplier to
deliver quality products on a timely basis, or the inability to develop
alternative sources if and as required, could result in delays which could have
a material adverse effect on us. Our remedies against suppliers who fail to
deliver products on a timely basis are limited by contractual liability
limitations contained in supply agreements and purchase orders and, in many
cases, by practical considerations relating to our desire to maintain good
relationships with the suppliers. As our suppliers revise and upgrade their
equipment technology, we may encounter difficulties in integrating the new
technology into our network.

         Many of the vendors from whom we purchase telecommunications bandwidth,
including the regional bell operating companies, competitive local exchange
carriers and other local exchange carriers, currently are subject to tariff
controls and other price constraints which in the future may be changed. In
addition, recently enacted legislation will produce changes in the market for
telecommunications services. These changes may affect the prices which we are
charged by the regional bell operating companies and other carriers, which could
have a material adverse effect on our business, financial condition and results
of operations. Moreover, we are subject to the effects of other potential
regulatory actions which, if taken, could increase the cost of our
telecommunications bandwidth through, for example, the imposition of access
charges.

THE TERMS OF OUR FINANCING ARRANGEMENTS MAY RESTRICT OUR OPERATIONS

         Our financing arrangements are secured by substantially all of our
assets and stock of some of our subsidiaries. These financing arrangements
require that we satisfy many financial covenants. Our ability to satisfy these
financial covenants may be affected by events beyond our control and, as a
result, we cannot assure you that we will be able to continue to satisfy such
covenants. These financing arrangements also currently prohibit us from paying
dividends and repurchasing our capital stock without the lender's consent. Our
failure to comply with the covenants and restrictions in these financing
arrangements could lead to a default under the terms of these agreements. In the
event of a default under the financing arrangements, our lenders would be
entitled to accelerate the indebtedness outstanding thereunder and foreclose
upon the assets securing such indebtedness. They would also be entitled to be
repaid from the proceeds of the liquidation of those assets before the assets
would be available for distribution to the holders of our securities, including
the holders of the notes. In addition, the collateral security arrangements
under our existing financing arrangements may adversely affect our ability to
obtain additional borrowings.

OUR FINANCIAL CONDITION MAY BE ADVERSELY AFFECTED IF OUR SYSTEMS AND THOSE OF
OUR SUPPLIERS FAIL BECAUSE OF YEAR 2000 PROBLEMS

         The commonly referred to Year 2000 ("Y2K") problem results from the
fact that many existing computer programs and systems use only two digits to
identify the year in the date field. These programs were designed and developed
without considering the impact of a change in the century designation. If not
corrected, computer applications that use a two-digit format could fail or
create erroneous results in

                                      -12-
any computer calculation or other processing involving the Year 2000 or a later
date. We have identified two main areas of Y2K risk:

                  1. Internal computer systems or embedded chips could be
         disrupted or fail, causing an interruption or decrease in productivity
         in our operations; and

                  2. Computer systems or embedded chips of third parties
         including, without limitation, financial institutions, suppliers,
         vendors, landlords, customers, international suppliers of
         telecommunications services and others, could be disrupted or fail,
         causing an interruption or decrease in our ability to continue our
         operations.

         We have developed detailed plans for implementing, testing and
completing any necessary modifications to our key computer systems and equipment
with embedded chips to ensure that they are Y2K compliant. We have engaged a
third party consultant to perform an assessment of our U.S. internal systems
(e.g., accounting, billing, customer support and network operations) to
determine the status of their Y2K compliance. The assessment of these systems
has been completed and, while some minor changes are necessary, we believe that
no material changes or modifications to our internal systems are required to
achieve Y2K compliance. Our U.S. chief information officer has developed a test
bed of our U.S. internal systems to implement and complete testing of the
requisite minor changes. We anticipate that our U.S. internal systems will be
Y2K ready by September 30, 1999. We are in the process of completing an
inventory of our internal systems that we use in Canada, United Kingdom, Europe
and Asia to determine the status of their Y2K compliance. Each international
office has plans in place to test, upgrade or, if necessary, replace components
of its internal systems to ensure they are Y2K compliant. We anticipate that our
international operations will be Y2K compliant during the fourth quarter of
1999. To help ensure that our network operations and services to our customers
are not interrupted due to the Y2K problem, we have established a network
operations team that meets weekly to examine our network on a worldwide basis.
This team of operational staff have conducted inventories of our network
equipment (software and hardware) and have found no material Y2K compliance
issues. We believe that all equipment currently being purchased for use in the
PSINet network is Y2K compliant. Any existing equipment that is not Y2K
compliant is planned to be made Y2K compliant through minor changes to the
software or hardware or, in limited instances, replacement of the equipment. We
anticipate that our network will be Y2K compliant by the end of the second
quarter of 1999. In addition to administering the implementation of necessary
upgrades for Y2K compliance, our network team is developing a contingency plan
to address any potential problems that may occur with our network as we enter
the year 2000. We believe that, as a result of our detailed assessment and
completed modifications, the Y2K issue will not pose significant operational
problems for us. However, if the requisite modifications and conversions are not
made, or not completed in a timely fashion, it is possible that the Y2K problem
could have a material impact on our operations.

         Our cost of addressing Y2K issues has been minor to date, less than 5%
of our information technology and network operations budgets, but this amount
may increase if additional outside consultants or personnel resources are
required or if important operational equipment must be remediated or replaced.
Our estimated total costs related to Y2K issues for 1999 is not expected to
exceed $2.0 million. These costs include equipment, consulting fees, software
and hardware upgrades, testing, remediation and, in limited instances,
replacement of equipment. The risk that Y2K issues could present to us include,
without limitation, disruption, delay or cessation of operations, including
operations that are subject to regulatory compliance. In each case, the
correction of the problem could result in substantial expense and disruption or
delay of our operations. The total cost of Y2K assessments and remediation is
funded through cash on hand and available from other sources and we are
expensing these costs, as appropriate. The financial impact of making all
required systems changes or other remediation efforts cannot be known precisely,
but it is not expected to be material to our financial position, results of

                                      -13-
operations, or cash flows. We have not canceled any principal information
technology projects as a result of our Y2K effort, although we have rescheduled
some internal tasks to accommodate this effort.

         In addition, we have identified, prioritized and are communicating with
our suppliers, vendors, customers, lenders and other material third parties to
determine their Y2K status and any probable impact on us. To date, our inquiries
have not revealed any significant Y2K noncompliance issue affecting our material
third parties. We will continue to monitor and evaluate our long-term
relationships with our material third parties based on their responses to our
inquiries and on information learned from other sources. If any of our material
third parties are not Y2K ready and their non-compliance causes a material
disruption to any of their respective businesses, our business could be
materially adversely affected. Disruptions could include, among other things:

           *    the failure of a material third party's business;

           *    a financial institution's inability to take and transfer funds;

           *    an interruption in delivery of supplies from vendors;

           *    a loss of voice and data connections;

           *    a loss of power to our facilities; and

           *    other interruptions in the normal course of our operations, the
               nature and extent of which we cannot foresee.

         We will continue to evaluate the nature of these risks, but at this
time we are unable to determine the probability that any such risk will occur,
or if it does occur, what the nature, length or other effects, if any, it may
have on us. If any of our material third parties experience significant failures
in their computer systems or operations due to Y2K non-compliance, it could
affect our ability to process transactions or otherwise engage in similar normal
business activities. For example, while we expect our internal systems, U.S. and
non-U.S., to be Y2K ready in stages during 1999, we and our customers who
communicate internationally will be dependent upon the Y2K-readiness of many
non-U.S. providers of telecommunication services and their vendors and
suppliers. If these providers and others are not Y2K ready, we and our customers
will not be able to send and receive data and other electronic transmissions,
which would have a material adverse effect on our revenues and business and that
of our customers. While many of these risks are outside our control, we have
identified and contacted our critical third party vendors and suppliers and are
establishing contingency plans to remedy any potential interruption to our
operations.

         While we believe that we are adequately addressing the Y2K issue, we
can not assure that our Y2K compliance effort will prevent every potential
interruption or that the cost and liabilities associated with the Y2K issue will
not materially adversely impact our business, prospects, revenues or financial
position. We are uncertain as to our most reasonably likely worst case Y2K
scenario and have not yet completed a contingency plan to handle a worst case
scenario. We expect to have such contingency plan in place by September 30,
1999.

WE FACE A HIGH LEVEL OF COMPETITION IN THE INTERNET SERVICES INDUSTRY

         The market for Internet connectivity and related services is extremely
competitive. We anticipate that competition will continue to intensify as the
use of the Internet grows. The tremendous growth and potential market size of
the Internet access market has attracted many new start-ups as well as
established businesses from different industries.

                                      -14-
Our current and prospective competitors include other national,
regional and local Internet service providers, long distance and local exchange
telecommunications companies, cable television, direct broadcast satellite,
wireless communications providers and on-line service providers. We believe that
our network, products and customer service distinguish us from these
competitors. However, some of these competitors have a significantly greater
market presence, brand recognition and financial, technical and personnel
resources than us.

         We compete with all of the major long distance companies, also known as
interexchange carriers, including AT&T, MCIWorldCom, Sprint and Cable &
Wireless/IMCI, which also offer Internet access services. The recent sweeping
reforms in the federal regulation of the telecommunications industry have
created greater opportunities for local exchange carriers, including the
regional bell operating companies, to enter the Internet connectivity market. We
believe that there is a move toward horizontal integration through acquisitions
of, joint ventures with, and the wholesale purchase of connectivity from
Internet service providers to address the Internet connectivity requirements of
the current business customers of long distance and local carriers. The
WorldCom/MFS/UUNet consolidation, the WorldCom/MCI merger, the ICG/NETCOM
merger, Cable & Wireless' purchase of the internetMCI assets, the
Intermedia/DIGEX merger, GTE's acquisition of BBN, Global Crossing's recently
announced plans to acquire Frontier Corp. (and Frontier's acquisition of Global
Center) and AT&T's purchase of IBM's global communications network are
indicative of this trend. Accordingly, we expect to experience increased
competition from the traditional telecommunications carriers. Many of these
telecommunications carriers may have the ability to bundle Internet access with
basic local and long distance telecommunications services. Such bundling of
services may have an adverse effect on our ability to compete effectively with
the telecommunications providers and may result in pricing pressure on us that
could have a material adverse effect on our business, financial condition and
results of operations.

         Many of the major cable companies have announced that they are
exploring the possibility of offering Internet connectivity, relying on the
viability of cable modems and economical upgrades to their networks. Several
announcements also have recently been made by other alternative service
companies approaching the Internet connectivity market with various wireless
terrestrial and satellite-based service technologies.

         The predominant on-line service providers, including America Online,
CompuServe, Microsoft Network and Prodigy, have all entered the Internet access
business by engineering their current proprietary networks to include Internet
access capabilities. We compete to a lesser extent with these on-line service
providers. However, America Online's recent acquisition of Netscape
Communications Corporation and related strategic alliance with Sun Microsystems
will enable it to offer a broader array of Internet protocol-based services and
products that could significantly enhance its ability to appeal to the business
marketplace and, as a result, compete more directly with us.

         Recently, there have been several announcements regarding the planned
deployment of broadband services for high speed Internet access by cable and
telephone companies. These services would include new technologies such as cable
modems and xDSL. These providers have initially targeted the residential
consumer. However, it is likely that their target markets will expand to
encompass business customers, which is our target market. This expansion could
adversely affect the pricing of our service offerings.

         As a result of the increase in the number of competitors and the
vertical and horizontal integration in the industry, we currently encounter and
expect to continue to encounter significant pricing pressure and other
competition in the future. Advances in technology as well as changes in the
marketplace and the regulatory environment are constantly occurring, and we
cannot predict the effect that ongoing or future developments may have on us or
on the pricing of our products and services. Increased price or other

                                      -15-
competition could result in erosion of our market share and could have a
material adverse effect on our business, financial condition and results of
operations. We cannot assure that we will have the financial resources,
technical expertise or marketing and support capabilities to continue to compete
successfully.

         As we continue to expand our operations outside the United States, we
will encounter new competitors and competitive environments. In some cases, we
will be forced to compete with and buy services from government-owned or
subsidized telecommunications providers. Some of these providers may enjoy a
monopoly on telecommunications services essential to our business. We cannot
assure that we will be able to purchase such services at a reasonable price or
at all. In addition to the risks associated with our previously described
competitors, foreign competitors may pose an even greater risk, as they may
possess a better understanding of their local markets and better working
relationships with local infrastructure providers and others. We cannot assure
that we can obtain similar levels of local knowledge. Failure to obtain that
knowledge could place us at a significant competitive disadvantage.

TECHNOLOGY TRENDS AND EVOLVING INDUSTRY STANDARDS COULD RESULT IN OUR
COMPETITORS DEVELOPING OR OBTAINING ACCESS TO BANDWIDTH AND TECHNOLOGIES THAT
CARRY MORE INFORMATION FASTER THAN OUR BANDWIDTH AND TECHNOLOGY AND,
CONSEQUENTLY, RENDER OUR BANDWIDTH OR TECHNOLOGY OBSOLETE

         Our products and services are targeted toward users of the Internet,
which has experienced rapid growth. The market for Internet access and related
services is characterized by rapidly changing technology, evolving industry
standards, changes in customer needs and frequent new product and service
introductions. Our future success will depend, in part, on our ability to
effectively use and develop leading technologies.

         We cannot assure that we will be successful in responding to changing
technology or market trends. In addition, services or technologies developed by
others may render our services or technologies uncompetitive or obsolete.
Furthermore, changes to our services in response to market demand may require
the adoption of new technologies that could likewise render many of our assets
technologically uncompetitive or obsolete. As we accept bandwidth from IXC and
our other existing global network suppliers or acquire bandwidth or equipment
from other suppliers that may better meet our needs than existing bandwidth or
equipment, many of our assets could be determined to be obsolete or excess. The
disposition of obsolete or excess assets could have a material adverse effect on
our business, financial condition and results of operations.

         Even if we do successfully respond to technological advances and
emerging industry standards, the integration of new technology may require
substantial time and expense, and we cannot assure that we will succeed in
adapting our network infrastructure in a timely and cost-effective manner.

WE MAY BE LIABLE FOR INFORMATION DISSEMINATED THROUGH NETWORK

         The law relating to liability of Internet service providers for
information carried on or disseminated through their networks is not completely
settled. A number of lawsuits have sought to impose such liability for
defamatory speech and infringement of copyrighted materials. The U.S. Supreme
Court has let stand a lower court ruling which held that an Internet service
provider was protected from liability for material posted on its system by a
provision of the Communications Decency Act. However, the findings in that case
may not be applicable in other circumstances. Other courts have held that online
service providers and Internet service providers may, under some circumstances,
be subject to damages for copying or distributing copyrighted materials.
Provisions of the Communications Decency Act which imposed criminal penalties
for using an interactive computer service for transmitting obscene or indecent
communications have been found unconstitutional by the U.S. Supreme Court.
However, on October 21, 1998, new federal legislation was enacted that requires
limitations on access to pornography and other

                                      -16-
material deemed "harmful to minors." This legislation has been attacked in court
as a violation of the First Amendment. We are unable to predict the outcome of
this case. The imposition upon Internet service providers or web server hosts of
potential liability for materials carried on or disseminated through their
systems could require us to implement measures to reduce our exposure to such
liability. Such measures may require that we spend substantial resources or
discontinue some product or service offerings. Any of these actions could have a
material adverse effect on our business, operating results and financial
condition.

         We carry errors and omissions insurance with a policy limit of $5.0
million, subject to deductibles and exclusions. Such coverage may not be
adequate or available to compensate us for all liability that may be imposed.
The imposition of liability in excess of, or the unavailability of, such
coverage could have a material adverse effect on our business, financial
condition and results of operations.

         The law relating to the regulation and liability of Internet access
providers in relation to information carried or disseminated also is undergoing
a process of development in other countries. Decisions, laws, regulations and
other activities regarding regulation and content liability may significantly
affect the development and profitability of companies offering on-line and
Internet access services, including us.

FCC REGULATIONS MAY LIMIT THE SERVICES WE CAN OFFER

         Consistent with our growth and acquisition strategy, we are now engaged
in, or will soon be engaged in, activities that subject us to varying degrees of
federal, state and local regulation. The FCC exercises jurisdiction over all
facilities of, and services offered by, telecommunications carriers to the
extent that they involve the provision, origination or termination of
jurisdictionally interstate or international communications. The state
regulatory commissions retain jurisdiction over the same facilities and services
to the extent they involve origination or termination of jurisdictionally
intrastate communications.

         Our Internet operations are not currently subject to direct regulation
by the FCC or any other governmental agency, other than regulations applicable
to businesses generally. However, the FCC has recently indicated that some
services offered over the Internet, such as phone-to-phone Internet protocol
telephony, may be functionally indistinguishable from traditional
telecommunications service offerings and their non-regulated status may have to
be re-examined. We are unable to predict what regulations may be adopted in the
future, or to what extent existing laws and regulations may be found applicable,
or the impact such new or existing laws may have on our business. We can not
assure that new laws or regulations relating to Internet services, or existing
laws found to apply to them, will not have a material adverse effect on us.
Although the FCC has recently decided not to allow local telephone companies to
impose per-minute access charges on Internet service providers, and that
decision has been upheld by the reviewing court, further regulatory and
legislative consideration of this issue is likely. In addition, some telephone
companies are seeking relief through state regulatory agencies. Such rules, if
adopted, would affect our costs of serving dial-up customers and could have a
material adverse effect on our business, financial condition and results of
operations.

         In addition to our Internet activities, we have recently focused
attention on acquiring telecommunications assets and facilities, which is a
regulated activity. Our wholly-owned subsidiary, PSINetworks Company, has
received an international Section 214 authorization from the FCC to provide
global facilities-based and global resale telecommunications services. Our
wholly-owned subsidiary, PSINet Telecom UK Limited, has received an
international facilities license from DTI and

                                      -17-
OFTEL, the responsible telecommunications regulatory bodies in the United
Kingdom. Currently, the FCC and OFTEL do not closely regulate the charges or
practices of non-dominant carriers, such as our subsidiaries. Nevertheless,
these regulatory agencies have the power to impose more stringent regulatory
requirements on us and to change our regulatory classification, which may
adversely affect our business.

         Our subsidiaries have also received competitive local exchange carrier
certification in New York, Virginia, Colorado and Texas, have applied for
competitive local exchange carrier certification in Maryland and California, and
we are considering the financial, regulatory and operational implications of
becoming a competitive local exchange carrier in other states. As a provider of
domestic basic telecommunications services, particularly competitive local
exchange services, we could become subject to further regulation by the FCC
and/or another regulatory agency, including state and local entities.

         An important issue for competitive local exchange carriers is the right
to receive reciprocal compensation for the transport and termination of Internet
traffic. Most states have required incumbent local exchange carriers to pay
competitive local exchange carriers reciprocal compensation. In October 1998,
the FCC determined that dedicated Digital Subscriber Line service is an
interstate service and properly tariffed at the interstate level. In February
1999, the FCC concluded that at least a substantial portion of dial-up Internet
service provider traffic is jurisdictionally interstate. The FCC also concluded
that its jurisdictional decision does not alter the exemption from access
charges currently enjoyed by Internet service providers. The FCC established a
proceeding to consider an appropriate compensation mechanism for interstate
Internet traffic. Pending the adoption of that mechanism, the FCC saw no reason
to interfere with existing interconnection agreements and reciprocal
compensation arrangements. The FCC order has been appealed. There can be no
assurance that any future court, state regulatory or FCC decision on this matter
will favor our position. An unfavorable result may have an adverse impact on our
potential future revenues as a competitive local exchange carrier, as well as
increasing our costs for PRIs generally.

IF WE EXPERIENCE SYSTEM FAILURE OR SHUTDOWN, WE MAY NOT BE ABLE TO DELIVER
SERVICES

         Our success depends upon our ability to deliver reliable, high-speed
access to the Internet and upon the ability and willingness of our
telecommunications providers to deliver reliable, high-speed telecommunications
service through their networks. Our network, and other networks providing
services to us, are vulnerable to damage or cessation of operations from fire,
earthquakes, severe storms, power loss, telecommunications failures and similar
events, particularly if such events occur within a high traffic location of the
network. We have designed our network to minimize the risk of such system
failure, for instance, with redundant circuits among points-of-presence to allow
traffic rerouting. In addition, we perform lab and field testing before
integrating new and emerging technology into the network, and we engage in
capacity planning. Nonetheless, we cannot assure that we will not experience
failures or shutdowns relating to individual points-of-presence or even
catastrophic failure of the entire network.

         We carry business personal property insurance at both scheduled
locations and unscheduled locations to protect us against losses due to property
damage and business interruption. Such coverage, however, may not be adequate or
available to compensate us for all losses that may occur. In addition, we
generally attempt to limit our liability to customers arising out of network
failures by contractually disclaiming all such liability. In respect of many
services, we have also contractually limited liability to a usage credit based
upon the amount of time that the system was not operational. We cannot assure,
however, that such limitations will be enforceable. In any event, significant or
prolonged system failures or shutdowns could damage our reputation and result in
the loss of customers.

                                      -18-
ALTHOUGH WE HAVE IMPLEMENTED NETWORK SECURITY MEASURES, OUR NETWORK MAY BE
SUSCEPTIBLE TO VIRUSES, BREAK-INS OR DISRUPTIONS

         We have implemented many network security measures, such as limiting
physical and network access to our routers. Nonetheless, our network's
infrastructure is potentially vulnerable to computer viruses, break-ins and
similar disruptive problems caused by our customers or other Internet users.
Computer viruses, break-ins or other problems caused by third parties could lead
to interruptions, delays or cessation in service to our customers. Furthermore,
such inappropriate use of the Internet by third parties could also potentially
jeopardize the security of confidential information stored in the computer
systems of our customers. This could, in turn, deter potential customers and
adversely affect our existing customer relationships.

         Security problems represent an ongoing threat to public and private
data networks. Attacks upon the security of Internet sites and infrastructure
continue to be reported to organizations such as the CERT Coordination Center at
Carnegie Mellon University, which facilitates responses of the Internet
community to computer security events. Addressing problems caused by computer
viruses, break-ins or other problems caused by third parties could have a
material adverse effect on us.

         The security services that we offer in connection with our customers'
networks cannot assure complete protection from computer viruses, break-ins and
other disruptive problems. Although we attempt to limit contractually our
liability in such instances, the occurrence of such problems may result in
claims against us or liability on our part. Such claims, regardless of their
ultimate outcome, could result in costly litigation and could have a material
adverse effect on our business or reputation or on our ability to attract and
retain customers for our products. Moreover, until more consumer reliance is
placed on security technologies available, the security and privacy concerns of
existing and potential customers may inhibit the growth of the Internet service
industry and our customer base and revenues.

RISK ASSOCIATED WITH DEPENDENCE ON TECHNOLOGY AND WITH PROPRIETARY RIGHTS

         Our success and ability to compete is dependent in part upon our
technology and technical expertise and, to a lesser degree, on our proprietary
rights as well. In order to establish and protect our technology, we rely on a
combination of copyright, trademark and trade secret laws and contractual
restrictions. Nevertheless, we cannot assure that such measures are adequate to
protect our proprietary technology. It may be possible for a third party to copy
or otherwise obtain and use our products or technology without authorization or
to develop similar technology independently. In addition, our products may be
licensed or otherwise utilized in foreign countries where laws may not protect
our proprietary rights to the same extent as do laws in the United States. It is
our policy to require employees and consultants and, when obtainable, suppliers
to execute confidentiality agreements upon the commencement of their
relationships with us. Nonetheless, we cannot assure that these precautions will
be adequate to prevent misappropriation of our technology or that our
competitors will not independently develop technologies that are substantially
equivalent or superior to our technology.

         In addition, we are also subject to the risk of adverse claims and
litigation alleging infringement by us of the intellectual property rights of
others. From time to time, we have received claims that we have infringed other
parties' proprietary rights. While we do not believe that we have infringed the
proprietary rights of other parties, we cannot assure that third parties will
not assert infringement claims in the future with respect to our current or
future products. Such claims may require that we enter into license arrangements
or may result in protracted and costly litigation, regardless of the merits of
such claims. We cannot assure that any necessary licenses will be available or
that, if available, such licenses can be obtained on commercially reasonable
terms.

                                      -19-
We have recently introduced new enterprise service offerings, including
value-added, Internet protocol-based enterprise communication services and
xDSL-based Internet access services in limited areas. The failure of these
services to gain market acceptance in a timely manner or at all, or the failure
of xDSL-based services, in particular, to achieve significant market coverage
could have a material adverse effect on our business, financial condition and
results of operations. If we introduce new or enhanced services with
reliability, quality or compatibility problems, it could significantly delay or
hinder market acceptance of such services, which could adversely affect our
ability to attract new customers and subscribers. Our services may contain
undetected errors or defects when first introduced or as enhancements are
introduced. Despite testing by us or our customers, we cannot assure that errors
will not be found in new services after commencement of commercial deployment.
Such errors could result in additional development costs, loss of or delays in
market acceptance, diversion of technical and other resources from our other
development efforts and the loss of credibility with our customers and
subscribers. Any such event could have a material adverse effect on our
business, financial condition and results of operations.

         Additionally, if we are unable to match our network capacity to
customer demand for our services, our network could become congested during
periods of peak customer demand. Such congestion could adversely affect the
quality of service we are able to provide. Conversely, due to the high fixed
cost nature of our infrastructure, if our network is under-utilized, it could
adversely affect our ability to provide cost-efficient services. Our failure to
match network capacity to demand could have a material adverse effect on our
business, financial condition or results of operations.

THE MARKET PRICE AND TRADING VOLUME OF OUR STOCK MAY BE VOLATILE

         The market price and trading volume of our common stock has been and
may continue to be highly volatile. Factors such as variations in our revenue,
earnings and cash flow and announcements of new service offerings, technological
innovations, strategic alliances and/or acquisitions involving our competitors
or price reductions by us, our competitors or providers of alternative services
could cause the market price of our common stock to fluctuate substantially. In
addition, the stock markets recently have experienced significant price and
volume fluctuations that particularly have affected technology-based companies
and resulted in changes in the market prices of the stocks of many companies
that have not been directly related to the operating performance of those
companies. Such broad market fluctuations have adversely affected and may
continue to adversely affect the market price of our common stock.

WE DO NOT ANTICIPATE THAT WE WILL PAY CASH DIVIDENDS ON OUR COMMON STOCK

         We have never declared or paid any cash dividends on our common stock
and do not anticipate paying cash dividends on our common stock in the
foreseeable future. In addition, our debt securities and credit facility contain
limitations on our ability to declare and pay cash dividends.

FORWARD-LOOKING STATEMENTS

         Some of the information contained in this prospectus may contain
forward-looking statements. Such statements can be identified by the use of
forward-looking terminology such as "believes," "expects," "may," "will,"
"should," or "anticipates" or similar words, or by discussions of strategy that
involve risks and uncertainties. These statements may discuss our future
expectations or contain projections of our results of operations or financial
condition or expected benefits to us resulting from acquisitions or
transactions. We cannot assure that the future results indicated, whether
expressed or implied, will be achieved. The risk factors noted in this section
and other factors noted throughout this prospectus, including risks and
uncertainties, could cause our actual results to differ materially from those
contained in any forward-looking statement.

                                      -20-
USE OF PROCEEDS

         The shares of common stock covered by this prospectus are being offered
by the Selling Shareholder and not by us. Consequently, we will not receive any
proceeds from the sale of these shares. However the shares that may be sold
under the prospectus include shares that the Selling Shareholder may acquire in
the future pursuant to stock options that we have granted to her. In order for
the Selling Shareholder to acquire any such shares, the Selling Shareholder will
be required to pay to us the exercise price specified in her option agreement.
We intend to use any proceeds that we receive from the exercise of such options
for working capital and general corporate purposes.

                                      -21-
SELLING SHAREHOLDER

         The table below sets forth, as of the date of this prospectus or a
subsequent date if amended or supplemented, (a) the name of the Selling
Shareholder and her relationship to PSINet during the past three years; (b) the
number of shares of common stock the Selling Shareholder beneficially owns; (c)
the number of shares of common stock offered pursuant to this prospectus by the
Selling Shareholder; and (d) the amount and percentage of the common stock
outstanding to be held by the Selling Shareholder after giving effect to the
offering of the common stock covered by this prospectus. The information
contained in this table may be amended or supplemented from time to time.
Shares                                 Shares Beneficially
                     Relationship              Beneficially            Shares            Owned After Offering
Name                  to PSINet                   Owned              Offered Hereby    ------------------------
                                                                                        Number        Percentage
----                 -------------              -----------          --------------     ------        ----------
Susan DiSesa         Former Consultant             9,825                9,825           - 0 -             0 %
-22-
PLAN OF DISTRIBUTION

         Any of or all of the shares may be sold from time to time to purchasers
directly by the Selling Shareholder. Alternatively, the Selling Shareholder may
from time to time offer the shares through underwriters, dealers or agents who
may receive compensation in the form of discounts, concessions or commissions
from the Selling Shareholder and/or the purchasers of shares for whom they may
act. The Selling Shareholder and any such underwriters, dealers or agents that
participate in the distribution of Shares may be deemed to be underwriters under
the Securities Act of 1933, as amended (the "Securities Act"). Any profit on the
sale of the shares by them and any discounts, commissions or concessions
received by them may be deemed to be underwriting discounts and commissions
under the Securities Act. To the extent required, at the time a particular offer
of shares is made, a supplement to this prospectus will be distributed which
will set forth the number of shares being offered and the terms of the offering.
These terms will include the name or names of any underwriters, dealers or
agents, any discounts, commissions and other items constituting compensation
from the Selling Shareholder and any discounts, commissions or concessions
allowed or reallowed or paid to dealers, including the proposed selling price to
the public.

         The shares may be sold from time to time in one or more transactions at
a fixed offering price, which may be changed, or at varying prices determined at
the time of sale or at negotiated prices.

         In order to comply with certain states' securities laws, if applicable,
the shares will be sold in such jurisdictions only through registered or
licensed brokers or dealers. In certain states the shares may not be sold unless
the shares have been registered or qualified for sale in such state or an
exemption from registration or qualification is available and is met.

                                 LEGAL MATTERS

         The validity of the securities offered hereby will be passed upon by
Nixon Peabody LLP, New York, New York, counsel for PSINet. Certain attorneys
with Nixon Peabody LLP currently own in the aggregate less than one percent of
our common stock.

                                    EXPERTS

         The consolidated financial statements of PSINet Inc. as of December 31,
1998 and 1997 and for each of the three years in the period ended December 31,
1998 incorporated by reference in this prospectus have been so incorporated in
reliance on the report of PricewaterhouseCoopers LLP, independent accountants,
given on the authority of said firm as experts in auditing and accounting.

                      DOCUMENTS INCORPORATED BY REFERENCE

         The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this prospectus, and information that we file later with
the SEC will automatically update and supersede this information. We are
incorporating by reference in this prospectus the following documents:

         1. Our annual report on Form 10-K for our fiscal year ended December
31, 1998. This report contains:

           *   audited  consolidated  balance sheets for us and our
               subsidiaries as of  December 31,  1998 and 1997

                                      -23-
*   related consolidated statements of operations, of changes
               in shareholders' equity and of cash flows for the years
               ended December 31, 1998, 1997 and 1996

         2. Our quarterly report on Form 10-Q for the three month period ended
March 31, 1999.

         3. Our current reports on Form 8-K dated

           *   July 31, 1997 (solely insofar as it relates to our
               Shareholder Rights Agreement dated May 8, 1996, as
               amended)

           *   August 20, 1997

         4. Our registration statement on Form 8-A dated April 7, 1995, as
amended (registration no. 0-25812)

         5. Our registration statement on Form 8-A dated June 4, 1996, as
amended (registration no. 0-25812)

         We are also incorporating by reference in this prospectus all reports
and other documents that we file after the date of this prospectus pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, prior
to the termination of the offering of securities under this prospectus. These
reports and documents will be incorporated by reference in and considered to be
a part of this prospectus as of the date of filing of such reports and
documents.

         Any statement contained in this prospectus or in a document which is
incorporated by reference herein will be modified or superseded for purposes of
this prospectus to the extent that a statement in any document that we file
after the date of this prospectus that also is incorporated by reference herein
modifies or supersedes such prior statement. Any such statement so modified or
superseded will not, except as so modified or superseded, constitute a part of
this prospectus.

         This prospectus incorporates by reference documents which are not
presented in this prospectus or delivered to you with it. You may request, and
we will send to you, without charge, copies of these documents, other than
exhibits to these documents, which we will send to you for a reasonable fee.
Requests should be directed to the Office of the Secretary, PSINet Inc., 510
Huntmar Park Drive, Herndon, Virginia 20170 (telephone (703) 904-4100).

                      WHERE YOU CAN FIND MORE INFORMATION

         We file annual, quarterly and special reports, proxy statements and
other information with the SEC. You may read and copy materials that we have
file with the SEC, including the registration statement, at the following SEC
public reference rooms:

   Judiciary Plaza          7 World Trade Center         Northwest Atrium Center
450 Fifth Street, N.W.           Suite 1300              500 West Madison Street
      Room 1024           New York, New York 10048             Suite 1400
 Washington, DC 20549                                    Chicago, Illinois 60661

         You can also obtain copies of filed documents, at prescribed rates, by
mail from the Public Reference Section of the SEC at its Judiciary Plaza
location, listed above, or by telephone at 1-800-SEC-0330 or electronically
through the SEC's Web Site at http://www.sec.gov.

                                      -24-
Our common stock is listed on the Nasdaq Stock Market's National Market
under the symbol "PSIX," and our SEC filings can also be read and obtained at
the following Nasdaq address:

                             The Nasdaq Stock Market
                                 Reports Section
                               1735 K Street, N.W.
                             Washington, D.C. 20006

         We furnish our stockholders with annual reports containing our audited
financial statements and with proxy material for our annual meetings complying
with the proxy requirements of the Securities Exchange Act of 1934.

                      DISCLOSURE OF COMMISSION POSITION ON
                 INDEMNIFICATION FOR SECURITIES ACT LIABILITIES

         Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers, and controlling persons of
PSInet pursuant to the foregoing provisions, PSINet has been informed that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act of 1933 and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by registrant of expenses incurred in
the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, registrant will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act of 1933 and will be governed by the
final adjudication of such issue.

         Except to the extent set forth herein, there is no charter provision,
by-law, contract, arrangement or statute pursuant to which any director or
officer of registrant is indemnified in any manner against any liability which
he may incur in his capacity as such.

                                      -25-
PART II.

               INFORMATION REQUIRED IN THE REGISTRATION STATEMENT

ITEM 8.  Exhibits

5.1              Opinion of Nixon Peabody LLP

23.1             Consent of PricewaterhouseCoopers LLP

23.2             Consent of Nixon Peabody LLP (filed as part of Exhibit 5.1)

24.1             Power of Attorney (included on the signature page of this
                 registration statement)

                                      -26-
SIGNATURES

         Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of Herndon, Commonwealth of Virginia on July 9, 1999.

                                   PSINET INC.

                                   By:     /s/  William L. Schrader
                                      ----------------------------------
                                           William L. Schrader, Chairman
                                            and Chief Executive Officer

                                POWER OF ATTORNEY

         KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints William L. Schrader, Harold S.
Wills, David N. Kunkel, Edward D. Postal, Michael J. Malesardi and Kathleen B.
Horne, and each or any of them, his true and lawful attorney-in-fact and agent,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to sign any registration statement
filed pursuant to Rule 462(b) under the Securities Act of 1933 and any and all
amendments (including post-effective amendments) to this registration statement
and to any registration statement filed pursuant to Rule 462(b), and to file
same, with all exhibits thereto and, other documents in connection therewith,
with the Securities and Exchange Commission, granting unto each said
attorney-in-fact and agent full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
foregoing, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and agent
or either of them, or their or his substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.

         Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.

        Name                           Title                                Date

/s/ William L. Schrader         Chairman, Chief Executive           July 9, 1999
-----------------------           Officer and Director
William L. Schrader           Principal Executive Officer)

/s/ Harold S. Wills             President, Chief Operating          July 9, 1999
--------------------                Officer and Director
Harold S. Wills

/s/ David N. Kunkel             Executive Vice President,           July 9, 1999
--------------------          General Counsel and Director
David N. Kunkel

                                      -27-
/s/ Edward D. Postal            Senior Vice President and Chief     July 9, 1999
---------------------             Financial Officer (Principal
Edward D. Postal                     Financial Officer)

/s/ Michael J. Malesardi        Vice President and Controller       July 9, 1999
-------------------------      (Principal Accounting Officer)
Michael J. Malesardi

/s/ William H. Baumer                   Director                    July 9, 1999
----------------------
William H. Baumer

/s/ Ralph J. Swett                      Director                    July 9, 1999
-----------------
Ralph J. Swett

/s/ Ian P. Sharp                         Director                   July 9, 1999
-----------------
Ian P. Sharp

                                      -28-