Major advances in neonatal care have led to significant improvements in survival rates for preterm infants, but this occurs at a cost, with a strong causal link between preterm birth and neurological deficits, including cerebral palsy (CP). Indeed, in high-income countries, up to 50% of children with CP were born preterm. The pathways that link preterm birth and brain injury are complex and multifactorial, but it is clear that preterm birth is strongly associated with damage to the white matter of the developing brain. Nearly 90% of preterm infants who later develop spastic CP have evidence of periventricular white matter injury. There are currently no treatments targeted at protecting the immature preterm brain. Umbilical cord blood (UCB) contains a diverse mix of stem and progenitor cells, and is a particularly promising source of cells for clinical applications, due to ethical and practical advantages over other potential therapeutic cell types. Recent studies have documented the potential benefits of UCB cells in reducing brain injury, particularly in rodent models of term neonatal hypoxia-ischemia. These studies indicate that UCB cells act via anti-inflammatory and immuno-modulatory effects, and release neurotrophic growth factors to support the damaged and surrounding brain tissue. The etiology of brain injury in preterm-born infants is less well understood than in term infants, but likely results from episodes of hypoperfusion, hypoxia-ischemia, and/or inflammation over a developmental period of white matter vulnerability. This review will explore current knowledge about the neuroprotective actions of UCB cells and their potential to ameliorate preterm brain injury through neonatal cell administration. We will also discuss the characteristics of UCB-derived from preterm and term infants for use in clinical applications.