Neurogenesis continues throughout adulthood. The neurogenic capacity of the brain increases after injury by, e.g., hypoxia-ischemia. However, it is well known that in many cases brain damage does not resolve spontaneously, indicating that the endogenous regenerative capacity of the brain is insufficient. Neonatal encephalopathy leads to high mortality rates and long-term neurologic deficits in babies worldwide. Therefore, there is an urgent need to develop more efficient therapeutic strategies. The latest findings indicate that stem cells represent a novel therapeutic possibility to improve outcome in models of neonatal encephalopathy. Transplanted stem cells secrete factors that stimulate and maintain neurogenesis, thereby increasing cell proliferation, neuronal differentiation, and functional integration. Understanding the molecular and cellular mechanisms underlying neurogenesis after an insult is crucial for developing tools to enhance the neurogenic capacity of the brain. The aim of this review is to discuss the endogenous capacity of the neonatal brain to regenerate after a cerebral ischemic insult. We present an overview of the molecular and cellular mechanisms underlying endogenous regenerative processes during development as well as after a cerebral ischemic insult. Furthermore, we will consider the potential to use stem cell transplantation as a means to boost endogenous neurogenesis and restore brain function.