Ischemically damaged brain can be accompanied by secondary degeneration of associated axonal connections e.g. Wallerian degeneration. Diffusion tensor imaging (DTI) is widely used to investigate axonal injury but the cellular correlates of many of the degenerative changes remain speculative. We investigated the relationship of DTI of directly damaged cerebral cortex and secondary axonal degeneration in the cerebral peduncle with cellular alterations in pan-axonal neurofilament staining, myelination, reactive astrocytes, activation of microglia/macrophages and neuronal cell death. DTI measures (axial, radial and mean diffusivity, and fractional anisotropy (FA)) were acquired at hyperacute (3 h), acute (1 and 2 d) and chronic (1 and 4 week) times after transient cerebral hypoxia with unilateral ischemia in neonatal rats. The tissue pathology underlying ischemic and degenerative responses had a complex relationship with DTI parameters. DTI changes at hyperacute and subacute times were smaller in magnitude and tended to be transient and/or delayed in cerebral peduncle compared to cerebral cortex. In cerebral peduncle by 1 d post-insult, there were reductions in neurofilament staining corresponding with decreases in parallel diffusivity which were more sensitive than mean diffusivity in detecting axonal changes. Ipsilesional reductions in FA within cerebral peduncle were robust in detecting both early and chronic degenerative responses. At one or four weeks post-insult, radial diffusivity was increased ipsilaterally in the cerebral peduncle corresponding to pathological evidence of a lack of ontogenic myelination in this region. The detailed differences in progression and magnitude of DTI and histological changes reported provide a reference for identifying the potential contribution of various cellular responses to FA, and, parallel, radial, and mean diffusivity.