Children who are born preterm are at risk for encephalopathy of prematurity, a leading cause of cerebral palsy, cognitive delay and behavioral disorders. Current interventions are limited and none have been shown to reverse cognitive and behavioral impairments, a primary determinant of poor quality of life for these children. Moreover, the mechanisms of perinatal brain injury that result in functional deficits and imaging abnormalities in the mature brain are poorly defined, limiting the potential to target interventions to those who may benefit most. To determine whether impairments are reversible after a prenatal insult, we investigated a spectrum of functional deficits and diffusion tensor imaging (DTI) abnormalities in young adult animals. We hypothesized that prenatal transient systemic hypoxia-ischemia (TSHI) would induce multiple functional deficits concomitant with reduced microstructural white and gray matter integrity, and tested whether these abnormalities could be ameliorated using postnatal erythropoietin (EPO), an emerging neurorestorative intervention. On embryonic day 18 uterine arteries were transiently occluded for 60min via laparotomy. Shams underwent anesthesia and laparotomy for 60min. Pups were born and TSHI pups were randomized to receive EPO or vehicle via intraperitoneal injection on postnatal days 1 to 5. Gait, social interaction, olfaction and open field testing was performed from postnatal day 25-35 before brains underwent ex vivo DTI to measure fractional anisotropy, axial diffusivity and radial diffusivity. Prenatal TSHI injury causes hyperactivity, impaired gait and poor social interaction in young adult rats that mimic the spectrum of deficits observed in children born preterm. Collectively, these data show for the first time in a model of encephalopathy of prematurity that postnatal EPO treatment mitigates impairments in social interaction, in addition to gait deficits. EPO also normalizes TSHI-induced microstructural abnormalities in fractional anisotropy and radial diffusivity in multiple regions, consistent with improved structural integrity and recovery of myelination. Taken together, these results show behavioral and memory deficits from perinatal brain injury are reversible. Furthermore, resolution of DTI abnormalities may predict responsiveness to emerging interventions, and serve as a biomarker of CNS injury and recovery.