Preterm infants are extremely vulnerable to a range of morbidities and mortality. Underdeveloped cardiac, respiratory, gastrointestinal, and immune systems in the preterm period increase the risk of necrotizing enterocolitis (NEC), a serious disease of the gut. NEC affects 5-12% of very-low birth-weight infants, leads to surgery in 20-40% of cases, and is fatal in 25-50% of cases. There are multiple factors that may contribute to NEC, but the exact cause is not yet fully understood. Severe cases can result in intestinal resection or death, and the health care costs average >$300,000/infant when surgical management is required. Different types of nutrition may affect the onset or progression of NEC. Several studies have indicated that bovine milk-based infant formulas lead to a higher incidence of NEC in preterm infants than does human milk (HM). However, it is not clear why HM is linked to a lower incidence of NEC or why some infants fed an exclusively HM diet still develop NEC. An area that has not been thoroughly explored is the use of semielemental or elemental formulas. These specialty formulas are easy to digest and absorb in the gut and may be an effective nutritional intervention for reducing the risk of NEC. This review summarizes what is known about the factors that contribute to the onset and progression of NEC, discusses its health care cost implications, and explores the impact that different formulas and HM have on this disease.