Neonatal sepsis and necrotizing enterocolitis (NEC) are associated with significant mortality and morbidity. Inflammation secondary to sepsis and NEC increases morbidity, especially those related to the lung, brain and eye. Therapeutic strategies that target inflammation and decrease the emergence of antibiotic resistance are urgently needed. Lactoferrin (Lf) is a multifunctional protein that modulates inflammation, cell growth and differentiation and has broad antimicrobial activity. Studies evaluating the efficacy and safety of Lf in the prevention of neonatal sepsis and NEC are currently in progress, and one completed study shows significant promise. In this article, the functions of this multifunctional molecule and current clinical evidence for its use in the newborn are reviewed. Lf prophylaxis and therapy may have a significant impact in improving clinical outcomes of vulnerable preterm neonates.