The adult brain exhibits a local increase in cortical blood flow in response to external stimulus. However, broadly varying hemodynamic responses in the brains of newborn and young infants have been reported. Particular controversy exists over whether the "true" neonatal response to stimulation consists of a decrease or an increase in local deoxyhemoglobin, corresponding to a positive (adult-like) or negative blood oxygen level-dependent (BOLD) signal in functional magnetic resonance imaging (fMRI), respectively. A major difficulty with previous studies has been the variability in human subjects and measurement paradigms. Here, we present a systematic study in neonatal rats that charts the evolution of the cortical blood flow response during postnatal development using exposed-cortex multispectral optical imaging. We demonstrate that postnatal-day-12-13 rats (equivalent to human newborns) exhibit an "inverted" hemodynamic response (increasing deoxyhemoglobin, negative BOLD) with early signs of oxygen consumption followed by delayed, active constriction of pial arteries. We observed that the hemodynamic response then matures via development of an initial hyperemic (positive BOLD) phase that eventually masks oxygen consumption and balances vasoconstriction toward adulthood. We also observed that neonatal responses are particularly susceptible to stimulus-evoked systemic blood pressure increases, leading to cortical hyperemia that resembles adult positive BOLD responses. We propose that this confound may account for much of the variability in prior studies of neonatal cortical hemodynamics. Our results suggest that functional magnetic resonance imaging studies of infant and child development may be profoundly influenced by the maturing neurovascular and autoregulatory systems of the neonatal brain.