Children undergoing perinatal brain injury often suffer from the dramatic consequences of this misfortune for the rest of their lives. Despite the severe clinical and socio-economic significance, no effective clinical strategies have yet been developed to counteract this condition. This review describes the pathophysiological mechanisms that are implicated in perinatal brain injury. These include the acute breakdown of neuronal membrane potential followed by the release of excitatory amino acids such as glutamate and aspartate. Glutamate binds to postsynaptically located glutamate receptors that regulate calcium channels. The resulting calcium influx activates proteases, lipases and endonucleases which in turn destroy the cellular skeleton. The acute lack of cellular energy during ischemia induces almost complete inhibition of cerebral protein biosynthesis. Once the ischemic period is over, protein biosynthesis returns to preischemic levels in non-vulnerable regions of the brain, while in more vulnerable areas it remains inhibited. A second wave of neuronal cell damage occurs during the reperfusion phase induced by the postischemic release of oxygen radicals, synthesis of nitric oxide (NO), inflammatory reactions and an imbalance between the excitatory and inhibitory neurotransmitter systems. Clinical studies have shown that intrauterine infection increases the risk of periventricular white matter damage especially in the immature fetus. This damage may be mediated by cardiovascular effects of endotoxins leading to cerebral hypoperfusion and by activation of apoptotic pathways in oligodendrocyte progenitors through the release of pro-inflammatory cytokines. Knowledge of these pathophysiological mechanisms has enabled scientists to develop new therapeutic strategies which have been shown to be neuroprotective in animal experiments. The potential of such therapies is discussed here, particularly the promising effects of postischemic induction of mild cerebral hypothermia, the application of the calcium-antagonist flunarizine and the administration of magnesium.