Cause
There are 3 basic ways in which fluid can accumulate in the brain :

• There is an increased production of fluid within the brain. This can occur if a papilloma form in the choroid plexus. This is rare in dogs, but has been reported to occur in Bull Mastiffs with inherited ataxia.
• Normal fluid absorption from the brain (across the meninges) is impaired. This may occur following inflammation of the meninges (meningitis) or a hemorrhage in the brain (subarachnoid hemorrhage) and this condition is called communicating hydrocephalus.
• Normal flow of cerebrospinal fluid (CSF) in the brain is obstructed - most frequently this occurs at the level of the cerebral aquaduct, or the lateral foramina of the 4th ventricle of the brain.. This condition is called non-communicating or obstructive hydrocephalus and it may be present at birth (congenital) such as stenosis of the aqueduct, or acquired later in life for example due to infections, tumours or space-occupying hemorrhages (hematomas). This is the most common form of hydrocephalus seen in Toy breeds of dog.

• Chihuahua
• Maltese Terrier
• Pomeranian
• Yorkshire Terrier

but it is also seen in brachycephalic dogs such as the : 

• Pekingese
• Boston Terrier
• Bulldogs

 and also in the Beagle, Bull Mastiff, Lhasa Apso and Poodle. The condition is also seen in other species eg cats. Hydrocephalus  may be genetically inherited in breeds with an increased risk.

The most obvious sign of  hydrocephalus is an enlarged "domed" skull and the spaces between the bones of the skull remain open , as does the fontanel . Progressive neurological signs may not occur in all animals with hydrocephalus, when they do occur they take the form of :

• Seizures (fits)
• Depression and dullness
• Blindness
• Paresis (limb weakness)
• Incoordination
• Strabismus (squinting) - ventrally and laterally.
• Oedema of the optic nerve (called papillodema) - can be seen on ophthalmoscopic examination of the optic disc.

Untreated hydrocephalus is usually progressive and results in death, but some Toy breed dogs (especially Chihuahuas) can survive without showing clinical signs.

Complications
Rapid removal of CSF in these patients can cause a subdural hemorrhage if the intraventricular pressure suddenly drops, so care is needed when performing corrective drainage surgery or when taking CSF for examination to screen for  meningitis.