This study investigated the potential of melatonin in ameliorating hypoxic damage to the periventricular white matter (PWM) in the neonatal brain. Vascular endothelial growth factor (VEGF), nitric oxide (NO), glutathione (GSH) and malondialdehyde (MDA) content in the PWM of 1-day-old rats subjected to hypoxia for a period of 2 hr was examined. Vascular endothelial growth factor, NO and MDA concentration was increased whereas that of GSH was reduced after the hypoxic exposure. Additionally, degenerating axons, apoptotic and necrotic cells and vacuolation of capillary endothelial cells were observed in the PWM. The neighboring ependymal and choroid plexus cells also appeared to undergo structural alterations. Increased vascular permeability in the PWM of hypoxic rats was evidenced by the leakage of rhodamine isothiocyanate (RhIC) which was taken up by the amoeboid microglial cells. In vitro experiments showed increased apoptosis in OLN-93 cells, an oligodendrocytic cell line, following hypoxic exposure. Hypoxic rats treated with melatonin showed reduced VEGF, NO and MDA concentrations, increased GSH content and reduced RhIC leakage in the PWM. The ultrastructure of axons, endothelial, ependymal and choroid plexus epithelial cells appeared relatively normal in the hypoxic animals treated with melatonin. The incidence of apoptotic OLN-93 cells was also reduced with melatonin treatment. We suggest that the protective effects of melatonin on various parameters in the PWM of hypoxic neonatal brains were due to its antioxidant properties.