Hypoxia-ischemia (HI) in the neonate leads to white matter injury and subsequently cerebral palsy. We find that expression of bone morphogenetic protein 4 (BMP4) increases in the neonatal mouse brain after unilateral common carotid artery ligation followed by hypoxia. Since signaling by the BMP family of factors is a potent inhibitor of oligodendroglial differentiation, we tested the hypothesis that antagonism of BMP signaling would prevent loss of oligodendroglia (OL) and white matter in a mouse model of perinatal HI. Perinatal HI was induced in transgenic mice in which the BMP antagonist noggin is overexpressed during oligodendrogenesis (pNSE-Noggin). Following perinatal HI, pNSE-Noggin mice had more oligodendroglial progenitor cells (OPCs) and more mature OL compared to wild type (WT) animals. The increase in OPC numbers did not result from proliferation but rather from increased differentiation from precursor cells. Immunofluorescence studies showed preservation of white matter in lesioned pNSE-Noggin mice compared to lesioned WT animals. Further, following perinatal HI, the pNSE-Noggin mice were protected from gait deficits. Together these findings indicate that the BMP-inhibitor noggin protects from HI-induced loss of oligodendroglial lineage cells and white matter as well as loss of motor function.