Co-existing infection/inflammation and birth asphyxia potentiate the risk of developing neonatal encephalopathy (NE) and adverse outcome. In a newborn piglet model we assessed the effect of E. coli lipopolysaccharide (LPS) infusion started 4 h prior to and continued for 48 h after hypoxia on brain cell death and systemic haematological changes compared to LPS and hypoxia alone. LPS sensitized hypoxia resulted in an increase in mortality and in brain cell death (TUNEL positive cells) throughout the whole brain, and in the internal capsule, periventricular white matter and sensorimotor cortex. LPS alone did not increase brain cell death at 48 h, despite evidence of neuroinflammation, including the greatest increases in microglial proliferation, reactive astrocytosis and cleavage of caspase-3. LPS exposure caused splenic hypertrophy and platelet count suppression. The combination of LPS and hypoxia resulted in the highest and most sustained systemic white cell count increase. These findings highlight the significant contribution of acute inflammation sensitization prior to an asphyxial insult on NE illness severity.