Neonatal brain injury resulting from various intractable disorders including intraventricular hemorrhage and hypoxic ischemic encephalopathy still remains a major cause of mortality and morbidities with few effective treatments. Recent preclinical research results showing the pleiotropic neuroprotective effects of stem cell therapy, specifically mesenchymal stem cells (MSCs), suggest that MSCs transplantation might be a promising new therapeutic modality for neuroprotection against the currently intractable and devastating neonatal brain injury with complex multifactorial etiology. This review summarizes recent advances in preclinical stem cell research for treating neonatal brain injury with a focus on the important issues including the mechanism of neuroprotection, and determining the ideal cell source, route, timing and dose of MSCs transplantation.