Chorioamnionitis is a major cause of preterm birth and brain injury. Bacterial invasion of the chorion and amnion, and/or the placenta, can lead to a fetal inflammatory response, which in turn has significant adverse consequences for the developing fetal brain. Accordingly, there is a strong causal link between chorioamnionitis, preterm brain injury and the pathogenesis of severe postnatal neurological deficits and cerebral palsy. Currently there are no treatments to protect or repair against brain injury in preterm infants born after pregnancy compromised by intrauterine infection. This review describes the injurious cascade of events in the preterm brain in response to a severe fetal inflammatory event. We will highlight specific periods of increased vulnerability, and the potential effects of therapeutic intervention with cell-based therapies. Many clinical trials are underway to investigate the efficacy of stem cells to treat patients with cerebral palsy. Stem cells, obtained from umbilical cord tissue and cord blood, normally discarded after birth, are emerging as a safe and potentially effective therapy. It is not yet known, however, which stem cell type(s) are the most efficacious for administration to preterm infants to treat brain injury-mediated inflammation. Individual stem cell populations found in cord blood and tissue, such as mesenchymal stem cells (MSCs) and endothelial progenitor cells (EPCs), have a number of potential benefits that may specifically target preterm inflammatory-induced brain injury. MSCs have strong immunomodulatory potential, protecting against global and local neuroinflammatory cascades triggered during infection to the fetus. EPCs have angiogenic and vascular reparative qualities that make them ideal for neurovascular repair. A combined therapy using both MSCs and EPCs to target inflammation and promote angiogenesis for re-establishment of vital vessel networks is a treatment concept that warrants further investigation.