Background Perinatal asphyxia is one of the leading causes of neonatal morbidity and mortality in the country. It leads to multi-organ failure with brain involvement as the major organ of concern (hypoxic-ischemic encephalopathy). Hepatic dysfunction is also a feature of perinatal asphyxia. Objectives To detect hepatic dysfunction in birth asphyxia. To correlate the liver damage with increasing severity of birth asphyxia and hypoxic-ischemic encephalopathy through Apgar score and Thompson score. Methods In this prospective observational study, after ethical clearance and informed consent from the parents, babies of gestational age >35 weeks weighing >1.8 kg, Apgar score <7 at 1 minute received in the newborn unit of a tertiary care hospital in West Bengal, India were enrolled. Thompson’s score was assessed every day. The liver function test of these patients was assessed on days 1, 3, 10, and 15. Ultrasonography of the whole abdomen was performed on days 1 and 14 of life to rule out other probable causes of hepatic injury. Results A total of 308 neonates were studied, of which Apgar score at 1 minute indicates that 99 (32.14%) of the newborns had severe birth asphyxia and the rest had moderate birth asphyxia. All the liver enzymes except total protein and albumin showed a significant rise on days 1 and 3 with increasing severity of asphyxia. This correlation was seen with Apgar score at 1 minute on day 1 with TSB (r = -0.256, P < .001), AST (r = -0.209, P < .01), ALT (r = -0.178, P < .002), ALP (r = -0.174, P < .002). As per Thompson score, total serum bilirubin, aspartate aminotransferase and alkaline phosphatase showed maximum correlation on days 1 (r = 0.253, P < .001, r = 0.187, P < .001 and r = 0.268, P < .001, respectively) and on day 3 (r = 0.159, P < .005, r = 0.231, P < .001, and r = 0.190, P < .002, respectively). Conclusion Thompson score and Apgar score can be correlated to perinatal asphyxia-related hepatic injury.