Background: Neonatal hypoxic-ischemic (HI) brain injury, is one of the leading causes of mortality and long-term neurological morbidity in newborns. Current treatment options for HI brain injury are very limited, but mesenchymal stem cell (MSC) therapy is a promising strategy to boost neuroregeneration after injury. Optimization strategies to further enhance the potential of MSCs are in development. In the current study we aimed to test the potency of hypoxic preconditioning (HP) to enhance the therapeutic efficacy of MSCs in a mouse model for neonatal HI injury. Methods: HI was induced on postnatal day 9 in C57Bl/6 mouse pups. MSCs were cultured at 1% oxygen levels for 24 hours prior to use (HP-MSCs) or under normoxic (21% O2) control conditions (NP-MSCs). At 10 days after induction of HI brain injury, HP-MSCs or NP-MSCs were intranasally administered. Lesion size, sensorimotor outcome, MSC migration and neuroinflammation were assessed by HE staining, cylinder rearing task, gold nanoparticle-labeled MSC tracing and IBA1 staining, respectively. In vitro, the effect of hypoxic preconditioning on MSC migration, potency and proteome profile was studied using assays for transwell-migration, neural stem cell differentiation and neuroinflammation, and LC-MS/MS, respectively. Results: HP-MSCs were superior to NP-MSCs in reducing lesion size and improving sensorimotor outcome after HI. Moreover, hypoxic preconditioning enhanced MSC migration specifically to the HI lesion after intranasal application and in vitro. Additionally, HP-MSCs enhanced neural stem cell (NSC) differentiation into more complex neurons in vitro but did not enhance anti-inflammatory effects compared to NP-MSCs. Lastly, hypoxic preconditioning enriched the expression of pathways mainly related to glucose metabolism and extracellular matrix remodeling in MSCs. Conclusions: Overall, this study showed for the first time that intranasal HP-MSC therapy is a promising optimization strategy to superiorly reduce lesion size and improve neurodevelopmental outcome in a mouse model of neonatal HI brain injury.