Chronic hypoxia during gestation and delivery results in oxidative stress and cerebrovascular dysfunction in the neonate. We assessed whether melatonin, a potent antioxidant and potential vasodilator, improves the cerebral vascular function in chronically hypoxic neonatal lambs gestated and born in the highlands (3600 m). Six lambs received melatonin (1 mg/kg per day oral) and six received vehicle, once a day for 8 days. During treatment, biometry and hemodynamic variables were recorded. After treatment, lambs were submitted to a graded FiO2 protocol to assess cardiovascular responses to oxygenation changes. At 12 days old, middle cerebral arteries (MCA) were collected for vascular reactivity, morphostructural, and immunostaining evaluation. Melatonin increased fractional growth at the beginning and improved carotid blood flow at all arterial PO2 levels by the end of the treatment (P < 0.05). Further, melatonin treatment improved vascular responses to potassium, serotonin, methacholine, and melatonin itself (P < 0.05). In addition, melatonin enhanced the endothelial response via nitric oxide-independent mechanisms in isolated arteries (162 ± 26 versus 266 ± 34 AUC, P < 0.05). Finally, nitrotyrosine staining as an oxidative stress marker decreased in the MCA media layer of melatonin-treated animals (0.01357 ± 0.00089 versus 0.00837 ± 0.00164 pixels/μm2 , P < 0.05). All the melatonin-induced changes were associated with no systemic cardiovascular alterations in vivo. In conclusion, oral treatment with melatonin modulates cerebral vascular function, resulting in a better cerebral perfusion and reduced oxidative stress in the neonatal period in chronically hypoxic lambs. Melatonin is a potential therapeutic agent for treating cerebrovascular dysfunction associated with oxidative stress and developmental hypoxia in neonates.