Hyperbilirubinemia (jaundice) is caused by raised levels of unconjugated bilirubin in the blood. When severe, susceptible brain regions including the cerebellum and auditory brainstem are damaged causing neurological sequelae such as ataxia, hearing loss and kernicterus. The mechanism(s) by which bilirubin exerts its toxic effect have not been completely understood to date. In this study we investigated the acute mechanisms by which bilirubin causes the neurotoxicity that contributes to hearing loss. We developed a novel mouse model that exhibits the neurological features seen in human Bilirubin-Induced Neurological Dysfunction (BIND) syndrome that we assessed with a behavioural score and auditory brainstem responses (ABR). Guided by initial experiments applying bilirubin to cultured cells in vitro, we performed whole genome gene expression measurements on mouse brain tissue (cerebellum and auditory brainstem) following bilirubin exposure to gain mechanistic insights into biochemical processes affected, and investigated further using immunoblotting. We then compared the gene changes induced by bilirubin to bacterial lipopolysaccharide (LPS), a well characterized inducer of neuroinflammation, to assess the degree of similarity between them. Finally, we examined the extent to which genetic perturbation of inflammation and both known and novel anti-inflammatory drugs could protect hearing from bilirubin-induced toxicity. The in vitro results indicated that bilirubin induces changes in gene expression consistent with endoplasmic reticulum (ER) stress and activation of the unfolded protein response (UPR). These gene changes were similar to the gene expression signature of thapsigargin-a known ER stress inducer. It also induced gene expression changes associated with inflammation and NF-κB activation. The in vivo model showed behavioural impairment and a raised auditory threshold. Whole genome gene expression analysis confirmed inflammation as a key mechanism of bilirubin neurotoxicity in the auditory pathway and shared gene expression hallmarks induced by exposure to bacterial lipopolysaccharide (LPS) a well-characterized inducer of neuroinflammation. Interestingly, bilirubin caused more severe damage to the auditory system than LPS in this model, but consistent with our hypothesis of neuroinflammation being a primary part of bilirubin toxicity, the hearing loss was protected by perturbing the inflammatory response. This was carried out genetically using lipocalin-2 (LCN2)-null mice, which is an inflammatory cytokine highly upregulated in response to bilirubin. Finally, we tested known and novel anti-inflammatory compounds (interfering with NF-κB and TNFα signalling), and also demonstrated protection of the auditory system from bilirubin toxicity. We have developed a novel, reversible, model for jaundice that shows movement impairment and auditory loss consistent with human symptoms. We used this model to establish ER-stress and inflammation as major contributors to bilirubin toxicity. Because of the rapid and reversible onset of toxicity in this novel model it represents a system to screen therapeutic compounds. We have demonstrated this by targeting inflammation genetically and with anti-inflammatory small molecules that offered protection against bilirubin toxicity. This also suggests that anti-inflammatory drugs could be of therapeutic use in hyperbilirubinemia.