Neonatal hypoxic-ischemic brain damage (HIBD) is one of the leading causes of neonatal mortality and permanent neurological disability worldwide and the effective treatment strategies are not yet available. It has been demonstrated that Chitosan oligosaccharide (COS) exerts protective effect in vitro ischemic brain injury. However, no information is available on possible effects of COS on neonatal HIBD. To investigate the hypothesis of the potential neuroprotective effect of COS on the brain injury due to HIBD, 7-day-old Sprague–Dawley rats were treated with left carotid artery ligation followed by exposure to 8% oxygen (balanced with nitrogen) for 2.5 h at 37 °C. After COS treatment, the cerebral damage was measured by behavior tasks, 2,3,5-triphenyltetrazolium chloride(TTC),... Hematoxyline-Eosin(HE), Nissl and Fluoro-Jade B(FJB)staining. In addition, the oxidative stress were assayed with ipsilateral hemisphere homogenates. Immunofluorescence staining were used to examine the activation of the astrocyte and microglia. Expression of inflammatory-related proteins were analyzed by western-blot analysis. In this study we found that administration of COS ameliorated early neurological reflex behavior, significantly reduce brain infarct volume and attenuated neuronal cell injury and degeneration. Furthermore, COS markedly decreased the level of MDA, lactic acid and increased SOD, GSH-Px and T-AOC. COS attenuated hypoxic-ischemic induced up-regulation of expressions of interleukin-1β (IL-1β), tumor necrosis factor alpha (TNF-α), meanwhile it dramatically increased the interleukin-10 (IL-10). These results suggest that COS exerts neuroprotection on hypoxic-ischemic brain damage in neonatal rats, it implies COS might be a potential therapeutic for the treatment of HIBD.