Filed Pursuant to Rule 424(b)(3)
                                                Registration No. 333-55966


                                 Red Hat, Inc.

                                 Common Stock

     The selling stockholders identified in this prospectus may offer and sell
the shares of common stock offered by this prospectus from time to time.  We
previously issued the shares in a private offering to acquire the selling
stockholders' businesses.

     We are registering the offer and sale of the shares held by the selling
stockholders to satisfy our contractual obligations to provide the selling
stockholders with freely tradeable shares. Red Hat will not receive any of the
proceeds from the sale of shares being sold by the selling stockholders.

     The common stock is quoted on the Nasdaq National Market under the symbol
"RHAT." The last reported sale price of the common stock on April 18, 2001 was
$5.84 per share. You are urged to obtain current market data, and should not use
the market price on April 18, 2001 as a prediction of the future market price of
the common stock.

See "Risk Factors" section beginning on page 2 to read about certain factors you
           should consider before buying shares of our common stock.

 Neither the U.S. Securities and Exchange Commission nor any other regulatory
body has approved or disapproved of these securities or passed upon the adequacy
   or accuracy of this prospectus.  Any representation to the contrary is a
                               criminal offense.

                       Prospectus dated April 27, 2001.


     You should read the following summary together with the more detailed
information appearing elsewhere in, or incorporated by reference into, this
prospectus. You should also read our financial statements and the notes to those
statements incorporated by reference into this prospectus.

                                    RED HAT

     We are the leader in open source solutions for Internet computing,
delivering on the promise of open source from small embedded devices to the most
prodigious enterprise. We apply our technological leadership to create open
source solutions for Internet infrastructure and post-PC environments, offer
services backed by the best understanding of open source and the most
comprehensive resources, deliver the brand of a widely trusted open source
leader and corporate partner, and persist in our commitment to the virtues of
open source to lead a revolution in the computing industry. We provide custom
engineering services to develop end-to-end software solutions primarily for use
in the UNIX and Linux markets and then provide ongoing support and maintenance
services for these custom developed software solutions. In addition, we have
developed a suite of software development tools that are sold through our web
site. In late February 2001, we initiated the Red Hat Network monthly
subscription services for personal users of Red Hat Linux. Through Red Hat
Network, we are able to remotely deploy and manage over the web, open source
software solutions on servers using Red Hat Linux as their operating system. We
will initiate an enterprise level version of Red Hat Network in the second half
of fiscal 2002 and are committed to providing additional services through Red
Hat Network to users of Red Hat Linux and other open source solutions.

     Our web site,, is a leading destination for open source software
users and developers and serves as the primary delivery mechanism and customer
interface for many of our offerings. also offers extensive news and
information for the open source community, an important forum for open source
software development, a commerce site and priority access for software downloads
and upgrades.  We are committed to serving the interests and needs of open
source software users and developers and continuing to share our product
developments with the open source community.

     Our principal executive offices are located at 2600 Meridian Parkway,
Durham, North Carolina 27713. Our telephone number is (919) 547-0012.

                                 RISK FACTORS

     You should carefully consider and evaluate all of the information in this
prospectus, including the risk factors set forth below and the documents
incorporated by reference into this prospectus, before investing in the shares
being offered.

     Risks Related to our Linux-based Open Source Business Model

Our open source software business model is unproven.

We have not demonstrated the success of our open source business model, which
gives our customers the right to freely copy and distribute our software. No
other company has built a successful open source business. Few open source
software products have gained widespread commercial acceptance partly due to the
lack of viable open source industry participants to offer adequate service and
support on a long term basis. In addition, open source vendors are not able to
provide industry standard warranties and indemnities for their products, since
these products have been developed largely by independent parties over whom open
source vendors exercise no control or supervision. If open source software
should fail to gain widespread commercial acceptance, we would not be able to
sustain our revenue growth and our business could fail.


We depend on the support of Linux developers not employed by the us to release
major product upgrades and maintain market share.

We may not be able to release major product upgrades of Official Red Hat Linux
on a timely basis because the heart of Official Red Hat Linux, the Linux kernel,
is maintained by third parties.  Linus Torvalds, the original developer of the
Linux kernel, and a small group of independent engineers are primarily
responsible for the development and evolution of the Linux kernel.  If this
group of developers fails to further develop the Linux kernel or if Mr. Torvalds
or other prominent Linux developers, such as Alan Cox, David Miller or Stephen
Tweedie, were to join one of our competitors or no longer work on the Linux
kernel, we would have to either rely on another party to further develop the
kernel or develop it ourselves.  We cannot predict whether enhancements to the
kernel would be available from reliable alternative sources.   We could be
forced to rely to a greater extent on our own development efforts, which would
increase our development expenses and may delay our product release and upgrade
schedules. In addition, any failure on the part of the kernel developers to
further develop and enhance the kernel could stifle the development of
additional Linux-based applications.

We may not be able to effectively assemble and test our software because it
consists largely of code developed by independent third parties over whom we
exercise no control, which could result in unreliable products and damage to our

Official Red Hat Linux, in compressed form, consists of approximately 1.1
gigabytes of code.  Of that total, in excess of 1,000 megabytes have been
developed by independent third parties, including approximately 10 megabytes of
code contained in the Linux kernel.  Included within the 1.1 gigabytes of code
are more than 800 distinct software components developed by thousands of
individual programmers which we must assemble and test before we can release a
new version of Official Red Hat Linux.  If these components are not reliable,
Official Red Hat Linux could fail, resulting in serious damage to our reputation
and potential litigation.  Although we attempt to assemble only the best
available components, we cannot be sure that we will be able to identify the
highest quality and most reliable components or successfully assemble and test
them.  In addition, if these components were no longer available, we would have
to develop them ourselves, which would significantly increase our development

The scarcity of software applications for Linux-based operating systems could
prevent commercial adoption of our products.

Our products will not gain widespread commercial adoption until there are more
third-party software applications designed to operate on Linux-based operating
systems.  These applications include word processors, databases, accounting
packages, spreadsheets, e-mail programs, Internet browsers, presentation and
graphics software and personal productivity applications.  We intend to
encourage the development of additional applications that operate on Linux-based
operating systems by attracting third-party developers to the Linux platform, by
providing open source tools to create these applications and by maintaining our
existing developer relationships through marketing and technical support for
third-party developers.  If we are not successful in achieving these goals,
however, our


products will not gain widespread commercial acceptance and we will not be able
to maintain our product sales growth.

We may not be able to generate revenue from sales of Official Red Hat Linux if
users can more quickly download it from the Internet.

Anyone can download a free copy of official Red Hat Linux from the Internet.
However, because this download can take up to 36 hours using a standard
telephone connection, many of our users choose to buy the shrink-wrapped version
of Official Red Hat Linux.  If hardware and data transmission technology
advances in the future to the point where increased bandwidth allows users to
more quickly download our products from the Internet, users may no longer choose
to purchase Official Red Hat Linux.  This could lead to a significant loss of
product revenue.

We may not succeed in shifting our business focus from traditional shrink-
wrapped software sales to offering subscription-based product and services

We are focusing our sales and marketing efforts on providing subscription-based
products and services as opposed to relying on sales of shrink-wrapped software.
This change has required us to expend significant financial and managerial
resources and may ultimately prove unsuccessful.  The failure to successfully
implement this transition of our sales model could materially adversely affect
our operating results.

Our customers may find it difficult to install and implement Official Red Hat
Linux, which could lead to customer dissatisfaction and damage our reputation.

Installation and implementation of Official Red Hat Linux often involves a
significant commitment of resources, financial and otherwise, by our customers.
This process can be lengthy due to the size and complexity of our products and
the need to purchase and install new applications.  The failure by us to attract
and retain services personnel to support our customers, the failure of companies
with which we have strategic alliances to commit sufficient resources towards
the installation and implementation of our products, or a delay in
implementation for any other reason could result in dissatisfied customers.
This could damage our reputation and the Red Hat brand and result in decreased

We may be unable to predict the future course of open source technology
development, which could reduce the market appeal of our products and damage our

We do not exercise control over many aspects of the development of open source
technology.  Historically, different groups of open source software programmers
have competed with each other to develop new technology.  Typically one of those
groups develops the technology that becomes more widely used than that developed
by others.  If we adopt new technology and incorporate it into our products, and
competing technology becomes more widely used, the market appeal of our products
may be reduced, which could harm our reputation, diminish the Red Hat brand and
result in decreased revenue.

             Risks Related to our Financial Results and Condition

Our limited operating history in the new and developing market for Linux-based
operating systems makes it difficult to evaluate our business.

Red Hat was formed in March 1993.  We began offering Official Red Hat Linux in
October 1994.  Our limited operating history and the developing market for
Linux-based operating systems makes it difficult to evaluate the risks and
uncertainties that we face.  Our failure to address these risks and
uncertainties could cause our business results to suffer and result in the loss
of all or part of your investment.

We have limited combined operating history with the companies we have acquired
since our initial public offering and may have difficulty integrating these

The successful integration of the operations, products, services and personnel
of Red Hat and the seven companies we have acquired since our initial public
offering -- Cygnus Solutions, Hell's Kitchen Systems, Inc., Bluecurve, Inc.,


WireSpeed Communications Corporation, C2Net Software, Inc. Akopia, Inc., and
Planning Technologies, Inc. -- is important to the future financial performance
of the combined enterprise.  The anticipated benefits of these acquisitions may
not be achieved unless, among other things, the operations, products, services
and personnel of the acquired companies are successfully combined with those of
Red Hat in a timely and efficient manner.  Integration of these companies'
operations, products, services and personnel may be hampered because, among
other things:

 .    the products and services offered by each of the acquired companies and Red
     Hat are highly complex and have been developed independently;

 .    integration of the product lines of Red Hat and each of the acquired
     companies will require the coordination of separate development and
     engineering teams from each company; and

 .    the employees and management of the acquired companies and Red Hat are
     located in disparate geographical regions.

In addition, the costs associated with integrating these companies' operations,
products, services and personnel may be substantial and could include, among
other things:

 .    employee redeployment or relocation; and

 .    the combination of research and development teams and processes.

Any of these difficulties and costs encountered in the transition process, could
divert the attention of management, and could have an adverse impact on the
revenues and operating results of the combined enterprise.

We expect to incur substantial losses on a GAAP basis for the foreseeable

We have incurred operating losses in six of our previous seven fiscal years,
including our most recent fiscal year ended February 28, 2001.  We expect to
incur significant losses for the foreseeable future, as we substantially
increase our sales and marketing, research and development and administrative
expenses.  In addition, we are investing considerable resources in our Red Hat
Network initiative and to expand our professional services offerings.  As a
result, we cannot be certain when or if we will achieve sustained profitability.
Failure to become and remain profitable may adversely affect the market price of
our common stock and our ability to raise capital and continue operations.

You should not rely on our quarterly results of operations as an indication of
our future results because they fluctuate significantly and are difficult to

Due to our limited combined operating history and the unpredictability of our
business, our revenue and operating results may fluctuate significantly from
quarter to quarter and are difficult to forecast.  We base our current and
projected future expense levels in part on our estimates of future revenue.  Our
expenses are, to a large extent, fixed in the short term.  We may not be able to
adjust our spending quickly if our revenue falls short of our expectations.
Accordingly, a revenue shortfall in a particular quarter would have a
disproportionate adverse effect on our operating results for that quarter.  You
should not rely on quarter-to-quarter comparisons of our results of operations
as an indication of our future performance.  Our future operating results may
fall below expectations of securities analysts or investors, which would likely
cause the market price of our common stock to decline significantly.

We may not be able to effectively attract additional enterprise customers and
preserve relationships with current enterprise customers, which could adversely
affect revenue.

Historically, we focused our sales and marketing efforts on product sales to
individuals.  We have recently, however, begun to focus our efforts on expanding
our enterprise customer base.  To this end, we have invested extensively to
attract enterprise customers.  These enterprise customers expect diverse and
extensive service programs, and if we are unable to continue to successfully
expand and enhance our service offerings, we may not be able to meet these
customers' needs or attract new customers, and, consequently, our revenue would


Our failure to update and modernize our internal systems, procedures and
controls may prevent the implementation of our business strategies in a rapidly
evolving market and may constrain our future growth.

Our operational and financial systems, procedures and controls, which were
adequate for a small private company, are becoming outdated as we grow.  Since
March 1, 1999 we have increased the number of employees more than tenfold.  To
accommodate this growth, we have evaluated our financial and operational
systems, procedures and controls.  Although we have revised or are in the
process of revising and updating most of them, if we continue our rapid growth,
we may not be able to improve our transaction processing and reporting systems
and procedures, or expand and train our expanding workforce quickly enough to
maintain a competitive position in our markets.  In addition, failure to quickly
replace obsolete systems, procedures and controls could impede our management's
decision-making abilities.  This, in turn, may impair our ability to pursue
business opportunities and may hamper future growth.

We may not be able to generate enough additional revenue from our international
expansion to offset the costs associated with establishing and maintaining
foreign operations.

A key component of our growth strategy is to expand our presence in foreign
markets.  We have recently established subsidiaries or offices in Canada,
Ireland, the United Kingdom, Germany, Italy, Japan, France, Singapore and
Australia, and are considering further expansion worldwide.  We may also enter
other markets as opportunities arise.  It will be costly to establish
international facilities and operations, promote our brand internationally, and
develop localized web sites and other systems.  Revenue from international
activities may not offset the expense of establishing and maintaining these
foreign operations. In addition, because we have little experience in marketing
and distributing products or services for these markets, we may not benefit from
any first-to-market advantages.

Our management team may not be able to successfully implement our business
strategies because it has only recently begun to work together.

Our business is highly dependent on the ability of our management to work
together effectively to meet the demands of our growth.  Several members of our
senior management have been employed by us for a relatively short period of
time.  These individuals have not previously worked together as a management
team.  The failure of our management team to work together effectively could
prevent efficient decision-making by our executive team, affecting product
development and sales and marketing efforts, which would negatively impact our
operating results.

We depend on our key personnel.

Our future success depends on the continued services of a number of key
officers, including our Chief Executive Officer and President, Matthew J.
Szulik, our Chief Operating Officer, Timothy J. Buckley, our Chief Technical
Officer, Michael Tiemann, our Chief Financial Officer, Kevin B. Thompson, and
our Chief Marketing Officer, James Neiser. The loss of the technical knowledge
and industry expertise of any of these people could seriously impede our
success. Moreover, the loss of one or a group of our key employees, particularly
to a competitor, and any resulting loss of customers could reduce our market
share and diminish the Red Hat brand.

With our declining stock price we may have increased difficulty in attracting
and retaining highly skilled employees.

As with most technology companies, a key component of our compensation package
for our employees is stock options.  With the decline in our stock price, many
of the options granted in the last 18 months are now out of the money.  In order
to retain our highly skilled workforce, we may be compelled to grant new
options.  If such new options are granted, they are likely to have a dilutive
effect on our stockholders.


We may lack the financial and operational resources needed to increase our
market share and compete effectively with Microsoft, other established operating
systems developers, software development tools developers and other service and
support providers.

In the market for operating systems, we face significant competition from larger
companies with greater financial resources and name recognition than we have.
These competitors, which offer hardware-independent multi-user operating systems
for Intel platforms and/or UNIX-based operating systems, include Microsoft,
Novell, IBM, Sun Microsystems, The Santa Cruz Operation, AT&T, Compaq, Hewlett-
Packard, Olivetti and Unisys.  Some of these competitors currently, or may in
the future, produce and market open source operating systems.

We also face competition in the market for software development tools and
operating systems for special purpose computing, including embedded systems.
Our competitors in this market, some of which have greater market share than we
do, include Wind River Systems, Integrated Systems Incorporated, Green Hills
Software, and the Metrowerks subsidiary of Motorola.  Some of these companies
currently produce or use open source software as part of their product
offerings.  We may not be able to compete effectively in this market if
customers choose proprietary solutions.  If the demand for open source solutions
in this market expands, however, we could lose market share as existing
competitors reposition or new companies emerge to address the opportunity.

As we increase our services offerings, we may face competition from larger and
more capable companies that currently service and support the Linux operating
system as well as other operating systems, particularly UNIX-based operating
systems, due to the fact that Linux-and UNIX-based operating systems share many
common features.  These companies, including IBM and Hewlett-Packard, may be
able to leverage their existing service organizations and provide higher levels
of support on a more cost-effective basis than we can.  We may not be able to
compete successfully with these current or potential competitors.

We may not be able to match the promotional activities and pricing policies
offered by other suppliers of Linux-based and other open source operating
systems, which could result in a loss of market share.

In the new and rapidly evolving market for Linux-based operating systems, we
face intense competition from a number of other suppliers of Linux-based
operating systems.  We also face competition to a lesser extent from developers
of non-Linux-based open source operating systems such as BSD-based operating
systems.  BSD-based operating systems such as FreeBSD, NetBSD and OpenBSD are
open source operating systems produced by communities of developers working
together via the Internet, and which are published and distributed by Walnut
Creek CD-ROM, among others.  We expect competition in broader open source
operating systems and the Linux-based operating systems market to intensify.  In
addition, companies like Sun Microsystems and IBM, which are more established
and have larger customer bases than we do, have indicated a growing interest in
the market for Linux-based operating systems.  With the recent acquisition of
BSDi by Wind River Systems, we will face increased competition in providing open
source solutions in the embedded space.  These companies may be able to
undertake more extensive promotional activities, adopt more aggressive pricing
policies, and offer more attractive terms to their customers than we can.
Furthermore, because Linux-based operating systems can be downloaded from the
Internet for free or purchased at a nominal cost and modified and re-sold with
few restrictions, traditional barriers to entry are minimal.  Accordingly, it is
possible that new competitors or alliances among existing competitors may emerge
and rapidly acquire significant market share.

If we fail to establish and maintain strategic distribution and other
collaborative relationships with industry-leading companies, we may not be able
to attract and retain a larger customer base.

Our success depends on our ability to continue to establish and maintain
strategic distribution and other collaborative relationships with industry-
leading hardware manufacturers, distributors, software vendors and enterprise
solutions providers.  These relationships allow us to offer our products and
services to a much larger customer base than we would otherwise be able to
through our direct sales and marketing efforts.  We may not be able to maintain
these relationships or replace them on attractive terms.  In addition, our
existing strategic relationships do not, and any future strategic relationships
may not, afford us any exclusive marketing or distribution rights.  As a result,
the companies with which we have strategic alliances are free to pursue
alternative technologies and to develop alternative products and services in
addition to or in lieu of our products and services, either on their own or in
collaboration with others, including our competitors.  Moreover, we cannot
guarantee that the companies


with which we have strategic relationships will market our products effectively
or continue to devote the resources necessary to provide us with effective
sales, marketing and technical support.

We may not be able to meet the operational and financial challenges that we will
encounter as our international operations expand.

As we expand our international operations, we will face a number of additional
challenges associated with the conduct of business overseas.  For example:

 .    we may have difficulty managing and administering a globally-dispersed

 .    fluctuations in exchange rates may negatively affect our operating results;

 .    we may not be able to repatriate the earnings of our foreign operations;

 .    we have to comply with a wide variety of foreign laws with which we are not

 .    we may not be able to adequately protect our trademarks overseas due to the
     uncertainty of laws and enforcement in certain countries relating to the
     protection of intellectual property rights;

 .    reductions in business activity during the summer months in Europe and
     certain other parts of the world could negatively impact the operating
     results of our foreign operations;

 .    export controls could prevent us from shipping our products into and from
     some markets;

 .    multiple and possibly overlapping tax structures could significantly reduce
     the financial performance of our foreign operations;

 .    changes in import/export duties and quotas could affect the competitive
     pricing of our products and services and reduce our market share in some
     countries; and

 .    economic or political instability in some international markets could
     result in the forfeiture of some foreign assets and the loss of sums spent
     developing and marketing those assets.

Expanding our services business will be costly and may not result in any benefit
to us.

We have expanded our strategic focus to place additional emphasis on consulting,
custom engineering and development, education and support services.  We cannot
be certain that our customers will engage our professional services organization
to assist with support, consulting, custom development, training and
implementation of our products.  We also cannot be certain that we can attract
or retain a sufficient number of the highly qualified services personnel that
the expansion of our services business will need.  In addition, this expansion
has required, and will continue to require, significant additional expenses and
development, financial and operational resources.  The need for these additional
resources will place further strain on our management, financial and operational
resources and may make it more difficult for us to achieve and maintain

Attempts to expand by means of business combinations and strategic alliances may
not be successful and may harm our operational efficiency, financial performance
and relationships with employees and third parties.

We may continue to expand our operations or market presence by entering into
additional business combinations, investments, joint ventures or other strategic
alliances with hardware manufacturers, software vendors, Internet companies,
open source software developers or other companies both in the United States and
internationally.  Our ability to expand in this way may be limited due to the
many financial and operational risks accompanying these transactions.  For

 .    we may have difficulty assimilating the operations, technology and
     personnel of the combined companies;


 .    our business may be disrupted by the allocation of resources to consummate
     these transactions;

 .    we may have problems retaining key technical and managerial personnel from
     acquired companies;

 .    we may experience one-time in-process research and development charges and
     ongoing expenses associated with amortization of goodwill and other
     purchased intangible assets;

 .    our stockholders will suffer dilution if we issue equity to fund these

 .    acquired businesses may initially be unprofitable resulting in our
     assumption of operating losses and increased expenses;

 .    our reputation may be harmed if the open source development community does
     not approve of these transactions;

 .    our relationships with existing employees, customers and business partners
     may be weakened or terminated as a result of these transactions; and

 .    our investment activities, particularly with respect to emerging-growth
     technology companies, are inherently risky and we may not realize any
     benefit from such activities.

                    Risks Related to our Internet Strategy

We may fail to promote and enhance our web site effectively, which may prevent
us from attracting new visitors, advertisers or electronic commerce partners to
our web site.

In order to attract and retain Internet users, service customers, and electronic
commerce partners, we intend to substantially increase our expenditures for
enhancing and further developing our web site.  Our success in promoting and
enhancing the web site will also depend on our ability to provide
high quality service delivery, content, features and functionality.  If we fail
to promote our web site successfully or if visitors to our web site or customers
do not perceive our services to be useful, current or of high quality, our
ability to generate revenue from our web site will be significantly impaired.

Visitors to our web site could experience delays and decreased performance
during periods of heavy traffic, which could result in dissatisfaction with our
web site and damage to our reputation.

Our web site must accommodate a high volume of traffic and deliver frequently
updated information.  Our web site has in the past experienced slower response
times or decreased traffic for a variety of reasons.  These occurrences have not
had a material impact on our business.  These types of occurrences in the
future, however, could materially adversely affect our reputation and brand name
and could cause users to perceive our web site as not functioning properly.
Under these circumstances, our users might choose another web site or other
methods to obtain Linux-based operating systems, services, or Linux-related

Our Internet strategy will fail if the infrastructure of the Internet is not
continually developed and maintained.

The success of our Internet strategy will depend in large part on the continued
development and maintenance of the infrastructure of the Internet.  Because
global commerce and the online exchange of information is new and evolving, we
cannot predict with any certainty that the Internet will be a viable commercial
marketplace in the long term.  The Internet has experienced, and we expect it to
continue to experience, significant growth in the number of users and amount of
traffic.  If the Internet continues to experience an increased number of users,
frequency of use or increased bandwidth requirements of users, it may not be
able to support the demands placed upon it by this growth, and its performance
and reliability may suffer.  Furthermore, the Internet has experienced a variety


outages and other delays as a result of damage to portions of its
infrastructure, and could face similar outages and delays in the future. Any
outage or delay could affect the level of Internet usage, as well as the volume
of traffic on our web site. In addition, the Internet could lose its viability
due to increased governmental regulation and delays in the development or
adoption of new standards and protocols to handle increased levels of activity.
If the necessary infrastructure, standards or protocols or complementary
products, services or facilities are not developed, or if the Internet does not
become a viable commercial marketplace, our Internet strategy will not succeed.

We are vulnerable to unexpected network interruptions caused by system failures,
which may result in reduced visitor traffic on our web site, decreased revenue
and harm to our reputation.

Substantially all of our communications hardware and other hardware related to
our web site is located at our facilities, although we have back-up and co-
location hardware for our web site located at third-party facilities.  Fire,
floods, hurricanes, tornadoes, earthquakes, power loss, telecommunications
failures, break-ins and similar events could damage these systems.  In addition,
although we have implemented network security measures, our servers are
vulnerable to computer viruses, electronic break-ins, human error and other
similar disruptive problems which could adversely affect our systems and web
site.  Although we try to prevent unauthorized access to our systems, we cannot
eliminate this risk entirely.  We could lose revenue and suffer damage to our
reputation if our systems were affected by any of these occurrences.  Our
insurance policies may not adequately compensate us for any losses that may
occur due to failures or interruptions in our systems.  We do not presently have
any secondary "off-site" systems or a formal disaster recovery plan.

                      Risks Related to Legal Uncertainty

We could be prevented from selling or developing our products if the GNU General
Public License and similar licenses under which our products are developed and
licensed are not enforceable.

The Linux kernel and the official Red Hat Linux operating system have been
developed and licensed under the GNU General Public License and similar
licenses.  These licenses state that any program licensed under them may be
liberally copied, modified and distributed.  We know of no circumstance under
which these licenses have been challenged or interpreted in court.  Accordingly,
it is possible that a court would hold these licenses to be unenforceable in the
event that someone were to file a claim asserting proprietary rights in a
program developed and distributed under them. Any ruling by a court that these
licenses are not enforceable, or that Linux-based operating systems, or
significant portions of them, may not be liberally copied, modified or
distributed, would have the effect of preventing us from selling or developing
our products.

Our products may contain defects that may be costly to correct, delay market
acceptance of our products and expose us to litigation.

Despite testing by us and our customers, errors have been and may continue to be
found in our products after commencement of commercial shipments.  This risk is
exacerbated by the fact that most of the code in our products is developed by
independent parties over whom we exercise no supervision or control.  If errors
are discovered, we may have to make significant expenditures of capital to
eliminate them and yet may not be able to successfully correct them in a timely
manner or at all.  Errors and failures in our products could result in a loss
of, or delay in, market acceptance of our products and could damage our
reputation and our ability to convince commercial users of the benefits of
Linux-based operating systems and other open source software products.

In addition, failures in our products could cause system failures for our
customers who may assert warranty and other claims for substantial damages
against us. Although our license agreements with our customers typically contain
provisions designed to limit our exposure to potential product liability claims,
it is possible that these provisions may not be effective or enforceable under
the laws of some jurisdictions.  Our insurance policies may not adequately limit
our exposure to this type of claim.  These claims, even if unsuccessful, could
be costly and time consuming to defend.


We are vulnerable to claims that our products infringe third-party intellectual
property rights particularly because our products are comprised of many distinct
software components developed by thousands of independent parties.

We may be exposed to future litigation based on claims that our products
infringe the intellectual property rights of others.  This risk is exacerbated
by the fact that most of the code in our products is developed by independent
parties over whom we exercise no supervision or control.  Claims of infringement
could require us to reengineer our products or seek to obtain licenses from
third parties in order to continue offering our products.  In addition, an
adverse legal decision affecting our intellectual property, or the use of
significant resources to defend against this type of claim, could place a
significant strain on our financial resources and harm our reputation.

Our efforts to protect our trademarks may not be adequate to prevent third
parties from misappropriating our intellectual property rights.

Our most valuable intellectual property is our collection of trademarks.  The
protective steps we have taken in the past have been, and may in the future
continue to be, inadequate to deter misappropriation of our trademark rights.
Although we do not believe that we have suffered any material harm from
misappropriation to date, we may be unable to detect the unauthorized use of, or
take appropriate steps to enforce, our trademark rights.  We have registered
some of our trademarks in the United States, Europe and Australia and have other
trademark applications pending in the United States, Europe, Australia, Canada,
and Japan. Effective trademark protection may not be available in every country
in which we offer or intend to offer our products and services. Failure to
adequately protect our trademark rights could damage or even destroy the Red Hat
brand and impair our ability to compete effectively. Furthermore, defending or
enforcing our trademark rights could result in the expenditure of significant
financial and managerial resources.

We may be sued as a result of information published or posted on or accessible
from our web site.

We may be subjected to claims for defamation, negligence, copyright or trademark
infringement or other claims relating to the information we publish on our web
site.  These types of claims have been brought, sometimes successfully, against
online services in the past, and can be costly to defend.  We may also be
subjected to claims based on content that is accessible from our web site
through links to other web sites or through content and materials that may be
posted by visitors to our web site.  We believe that the scope and amount of our
commercial and general liability insurance is appropriate, given our current
financial position.  However, this insurance may not adequately protect us
against these types of claims.  We have not been a party to any lawsuit of this
type to date.

               Risks Related to the Market for Our Common Stock

Our stock price has been extremely volatile and you may not be able to resell
your shares at or above your purchase price.

The trading price of our common stock has been and is likely to continue to be
highly volatile and could be subject to wide fluctuations in response to factors
such as:

 .    actual or anticipated variations in quarterly operating results;

 .    new products or services offered by Red Hat or our competitors;

 .    changes in financial estimates by securities analysts;

 .    conditions or trends in the Internet, Linux and software industries;

 .    changes in the economic performance and/or market valuations of other
     Internet, Linux and software industries;


 .    announcements by us or our competitors of significant acquisitions,
     strategic partnerships, joint ventures or capital commitments;

 .    additions or departures of key personnel;

 .    sales of common stock; and

 .    other events or factors, many of which are beyond our control.

In addition, the stock market in general, and the NASDAQ National Market and the
market for Internet-related and technology companies in particular, has
experienced extreme price and volume fluctuations that have often been unrelated
or disproportionate to the operating performance of such companies.  In
addition, broad market and industry factors may materially adversely affect the
market price of our common stock, regardless of our actual operating
performance.  In the past, following periods of volatility in the market price
of a company's securities, securities class-action litigation has often been
instituted against such companies.  Such litigation, if instituted, could result
in substantial costs and a diversion of management's attention and resources,
which would materially adversely affect our business, financial condition and
operating results.



     Some of the statements under "Prospectus Summary", "Risk Factors",
"Management's Discussion and Analysis of Financial Condition and Results of
Operations", "Business", and elsewhere in this prospectus or the documents
incorporated herein by reference constitute forward-looking statements. In some
cases, you can identify forward-looking statements by terminology such as "may",
"will", "should", "expects", "plans", "anticipates", "believes", "estimated",
"predicts", "potential", or "continue" or the negative of such terms or other
comparable terminology. These statements are only predictions and involve known
and unknown risks, uncertainties, and other factors that may cause our or our
industry's actual results, levels of activity, performance, or achievements to
be materially different from any future results, levels of activity,
performance, or achievements expressed or implied by such forward-looking
statements. These factors include, among other things, those listed under "Risk
Factors" and elsewhere in this prospectus.

     Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, levels of
activity, performance, or achievements.  We are under no duty to update any of
the forward-looking statements after the date of this prospectus to conform
forward-looking statements to actual results.


     We file annual, quarterly and current reports, proxy statements and other
information with the U.S. Securities Exchange Commission (the "SEC").  These
reports and information relate to our business, financial condition and other
matters.  You may read and copy these reports, proxy statements and other
information at the SEC's Public Reference Room at 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the regional offices of the SEC located at 7
World Trade Center, Suite 1300, New York, New York 10048 and at 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661.  You may obtain information on the
operation of the SEC's Public Reference Room in Washington, D.C. by calling the
SEC at 1-800-SEC-0330.  Copies may be obtained from the SEC by paying the
required fees.  The SEC maintains an internet web site that contains reports,
proxy and information statements and other information regarding Red Hat and
other registrants that file electronically with the SEC.  The SEC's web site is
located at

     The SEC allows us to "incorporate by reference" the information we file
with it, which means that we can disclose important information to you by
referring to documents we have previously filed with the SEC. The information
incorporated by reference is considered to be part of this prospectus, and
information that we file later with the SEC will automatically update and
supercede this information. We incorporate by reference the documents listed
below and any future filings made with the SEC under Sections 13(a), 13(c), 14
or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), until the selling stockholders sell all the shares offered by this
prospectus or we terminate the offering.

     (1)  The section entitled "Description of the Registrant's Securities to be
          Registered" contained in our Registration Statement on Form 8-A (File
          No. 00026281) filed on June 4, 1999, pursuant to Section 12(g) of the
          Exchange Act; and

     (2)  Our Annual Report on Form 10-K for the fiscal year ended February 28,
          2001, as amended by the Form 10-K/A filed on April 26, 2001.


     We will provide a free copy of any or all of the documents incorporated by
reference in this prospectus (excluding exhibits to these documents unless the
exhibits are specifically incorporated by reference) to anyone who receives this
prospectus.  Written or telephone requests should be directed to Mark H.
Webbink, General Counsel, Red Hat, Inc., Post Office Box 13588, Research
Triangle Park, North Carolina 27709.

     This prospectus is part of a Registration Statement on Form S-3 filed with
the SEC by Red Hat.  This prospectus does not contain all of the information set
forth in the registration statement and the exhibits to the registration
statement.  Statements about the contents of contracts or other documents
contained in this prospectus or in any other filing to which we refer you are
not necessarily complete.  You should review the actual copy of these documents
filed as an exhibit to the registration statement or other filing.  You may
obtain a copy of the registration statement and the exhibits filed with it from
the SEC at any of the locations listed above.

                                USE OF PROCEEDS

     We will not receive any proceeds from the sale of shares being sold by the
selling stockholders.

                                DIVIDEND POLICY

     We have never paid any cash dividends on our common stock and do not
anticipate paying any cash dividends in the foreseeable future.  We presently
intend to retain future earnings, if any, to finance the expansion and growth of
our business.  Payment of future dividends, if any, will be at the discretion of
our Board of Directors after taking into account various factors, including our
financial condition, operating results, current and anticipated cash needs and
plans for expansion.


                             SELLING STOCKHOLDERS

     The following table sets forth certain information known to Red Hat
regarding the beneficial ownership of the shares to be offered by this
prospectus as of April 19, 2001 and as adjusted to reflect the sale of the
shares of common stock in this offering.

     Unless otherwise indicated, to the knowledge of Red Hat, each stockholder
possesses sole voting and investment power over the shares listed, except for
shares owned jointly with that person's spouse.

                                                                   Number of               Number of             Number of
                                                                    Shares                Shares to be            Shares
                                                                 Beneficially                 Sold              Beneficially
                                                                Owned Prior to               in the            Owned After the
Name of Selling Stockholder                                      the Offering               Offering              Offering
------------------------------------------------------      ---------------------      -----------------     ------------------
ENS, Inc.                                                               3,156,036              3,156,036                    ---
Arturo Sanchez                                                          1,292,035              1,292,035                    ---
Ronald Spencer                                                            663,705                663,705                    ---
Applied Theory Corporation                                                521,769                521,769                    ---
Grumman Hill Group                                                        521,769                521,769                    ---
AMP Capital Partners, LLC                                                 453,067                404,879                 48,188
Peter Korman                                                              154,859                154,859                    ---
David Adams                                                               201,295                 40,259                161,036
Brett Pinegar                                                              50,323                 10,065                 40,258
G & H Partners                                                             13,535                 12,095                  1,440
Chris Campbell                                                              1,948                  1,948                    ---
Mike Cravotta                                                               1,948                  1,948                    ---
David Wingate                                                               1,887                    378                  1,509
Numbers @ Work, LLC                                                         1,509                    302                  1,207
Kelly Laughlin                                                              1,298                  1,298                    ---
Mike Sanchez                                                                  974                    974                    ---
Bryan Troutman                                                                707                    707                    ---
Anthony Ware                                                                  707                    707                    ---
Barry Wright                                                                  480                    480                    ---
Tina Smith                                                                    407                    407                    ---
Edward Schaller                                                               393                     79                    314
Rick Fritts                                                                   324                    324                    ---
Antonese Robertson                                                            270                    270                    ---
Timothy Scott Lee                                                             194                    194                    ---
Leon K. Norton                                                                107                    107                    ---
David Ouellette                                                               107                    107                    ---
Sidney Haggard                                                                 60                     60                    ---

                             PLAN OF DISTRIBUTION

     Red Hat is registering 6,787,761 shares of the common stock offered hereby
on behalf of the selling stockholders. As used herein, "Selling Stockholders"
includes donees, pledgees, transferees or other successors-in-interest selling
shares received after the date of this prospectus from a Selling Stockholder, as
a gift, pledge, partnership distribution or other non-sale related transfer. All
costs, expenses and fees in connection with the registration of the common stock
offered hereby will be borne by Red Hat. Brokerage commissions and similar
selling expenses, if any, attributable to the sale of these shares of common
stock will be borne by the Selling Stockholders. Sales of shares may be effected
by Selling Stockholders from time to time in one or more types of transactions
(which may include block transactions) on the Nasdaq National Market, in
negotiated transactions, through put or call option transactions relating to the
shares, through short sales of shares or a combination of these methods of sale,
at market prices prevailing at the time of sale or at negotiated prices. These
transactions may or may not involve brokers or dealers. The Selling Stockholders
have advised us that they have not entered into any agreements, understandings
or arrangements with any underwriters or broker-dealers regarding the sale of
their securities, nor is their any underwriters or broker-dealers acting in
connection with the proposed sale of shares by the Selling Stockholders.

     The Selling Stockholders may effect transactions by selling shares directly
to purchasers or through broker-dealers, which may act as agents or principals.
These broker-dealers may receive compensation in the form of discounts,
concessions or commissions from the Selling Stockholders and/or the purchasers
of shares for whom these broker-dealers may act as agents or to whom they sell
as principal, or both.  This compensation might be in excess of customary

     The Selling Stockholders and any broker-dealers that act in connection with
the sale of shares might be deemed to be "underwriters" within the meaning of
Section 2(11) of the Securities Act, and any commissions received by these
broker-dealers and any profit on the resale of the Shares sold by them while
acting as principals might be deemed to be underwriting discounts or commissions
under the Securities Act.  We have agreed to indemnify each Selling Stockholder
against certain liabilities, including liabilities arising under the Securities
Act.  The Selling Stockholders may agree to indemnify any agent, dealer or
broker-dealer that participates in transactions involving sales of the shares
against certain liabilities, including liabilities arising under the Securities


     Because Selling Stockholders may be deemed to be "underwriters" within the
meaning of Section 2(11) of the Securities Act, the Selling Stockholders will be
subject to the prospectus delivery requirements of the Securities Act, which may
include delivery through the facilities of the Nasdaq National Market pursuant
to Rule 153 under the Securities Act.  The anti-manipulative provisions of
Regulation M promulgated under the Exchange Act also may apply to their sales in
the market.

     Selling Stockholders also may resell all or a portion of the shares in open
market transactions in reliance upon Rule 144 under the Securities Act, provided
they meet the criteria and conform to the requirements of that Rule.

     Upon being notified by a Selling Stockholder that any material arrangement
has been entered into with a broker-dealer for the sale of shares through a
block trade, special offering, exchange distribution or secondary distribution
or a purchase by a broker or dealer, we will file a supplement to this
prospectus, if required, pursuant to Rule 462(b) under the Securities Act,
disclosing (i) the name of the Selling Stockholder and the participating broker-
dealer(s), (ii) the number of shares involved, (iii) the price at which the
shares were sold, (iv) the commissions paid or discounts or concessions allowed
to the broker-dealer(s), where applicable, (v) that the broker-dealer(s) did not
conduct any investigation to verify the information set forth or incorporated by
reference into this prospectus and (vi) other facts material to the transaction.
In addition, upon being notified by a Selling Stockholder that a donee, pledgee,
transferee or other successor-in-interest intends to sell more than 500 shares,
we will file a supplement to this prospectus.

                                TRANSFER AGENT

     The transfer agent and registrar for the common stock is Mellon Investor
Services LLC.

                                 LEGAL MATTERS

     The validity of the shares of common stock to be issued in this offering
will be passed upon for Red Hat by Moore & Van Allen PLLC, Charlotte, North


     The consolidated financial statements incorporated in this prospectus by
reference to the Annual Report on Form 10-K for the fiscal year ended February
28, 2001 in reliance on the report of PricewaterhouseCoopers LLP, independent
accountants, given on the authority of said firm as experts in auditing and