Neonatal encephalopathy (NE) is a significant cause of morbidity and mortality. Persistent inflammation and activation of leukocytes mediate brain injury in NE. The standard of care for NE, therapeutic hypothermia (TH), does not improve outcomes in nearly half of moderate to severe cases, resulting in the need for new adjuvant therapies, and immunomodulation holds promise. Our objective was to explore systemic leukocyte phenotype in infants with NE and healthy controls in response to lipopolysaccharide (LPS). Twenty-four infants with NE (NE II-20; NE III = 4) requiring TH and 17 term neonatal controls were enrolled, and blood samples were analyzed between days 1 and 4 of life at a mean (SD) timepoint of 2.1 (± 0.81) days of postnatal life at the time of the routine phlebotomy. Leukocyte cell surface expression levels of Toll-like receptor 4, NADPH oxidase (NOX2), CD11b, mitochondrial mass, and mitochondrial superoxide production were measured by flow cytometry. Gene expression of TRIF (TIR domain–containing adapter-inducing interferon-β), MyD88 and IRAK4 was measured by reverse transcription–polymerase chain reaction. Infants with NE had significantly lower expression of neutrophil CD11b and NOX2 with LPS stimulation compared to healthy term controls. Mitochondrial mass in neutrophils and monocytes was significantly increased in NE infants with LPS compared to controls, potentially indicating a dysregulated metabolism. Infants with NE had significantly lower IRAK4 at baseline than controls. NE infants display a dysregulated inflammatory response compared to healthy infants, with LPS hyporesponsiveness to CD11b and NOX2 and decreased IRAK4 gene expression. This dysregulated immune profile may indicate an adaptable response to limit hyperinflammation.