Hypoxic-ischemic brain damage (HIBD), a leading cause of perinatal disability and death, has limited therapeutic options. Stem cell therapy has been demonstrated as a potential novel therapy for neurological disorders. Compared with other types of stem cells, umbilical cord blood mesenchymal stem cells (UCB-MSCs) have several unique characteristics, such as a higher rate of cell proliferation and clonality. However, the limited life span of UCB-MSCs hinders their clinical application. Therefore, efforts are urgently needed to circumvent this disadvantage. Telomerase reverse transcriptase (TERT), which promotes cell proliferation and survival, plays a protective role in hypoxic-ischemic (HI) brain injury. Thus, it is reasonable to propose that UCB-MSCs modified by exogenous TERT expression might have a longer lifespan and increased viability. Moreover, brain-derived neurotrophic factor (BDNF), a neurotrophin that regulates development, regeneration, survival and maintenance of neurons, facilitates post-injury recovery when administered by infusion or virus-mediated delivery. Therefore, TERT- and BDNF-modified UCB-MSCs may have a longer lifespan and also maintain neural differentiation, thus promoting the recovery of neurological function following hypoxic-ischemic brain damage (HIBD) and thereby representing a new effective strategy for HIBD in neonates.