Neuroinflammation subsequent to developmental brain injury contributes to a wave of secondary neurodegeneration and to reactive astrogliosis that can inhibit oligodendrocyte progenitor differentiation and subsequent myelination. Here we evaluated the therapeutic efficacy of a small molecule antagonist for a TGFß receptor in a model of moderate perinatal hypoxia-ischemia (H-I). Osmotic pumps containing SB505124, an antagonist of the type 1 TGFß1 receptor ALK5, or vehicle, were implanted three days after H-I induced at postnatal day 6. Perinatal H-I induced selective neuronal death, ventriculomegaly, elevated CNS levels of IL-6 and IL-1a, astrogliosis, and fewer proliferating oligodendrocyte progenitors. Myelination was reduced by $50%. Anterograde tracing revealed extensive axonal loss in the corticospinal tract. These alterations correlated with functional impairments across a battery of behavioral tests. All of these parameters were brought back towards normal levels with SB505124 treatment. Notably, SB505124 preserved neurons in the hippocampus and thalamus. Our results indicate that inhibiting ALK5 signaling, even as late as three days after injury, creates an environment that is more permissive for oligodendrocyte maturation and myelination producing significant improvements in neurological outcome. This new therapeutic would be especially appropriate for moderately preterm asphyxiated infants, for whom there is presently no FDA approved neuroprotective therapeutic.