Melatonin has diverse physiological actions in addition to its well-recognized maintenance roles in circadian and seasonal timing. In particular, melatonin may have a direct protective action on the developing fetal brain. We examined the cellular processes by which melatonin provides protection following an acute late gestation hypoxic insult. 15 fetal sheep at 126 days gestation were instrumented with a brachial artery catheter and a silastic cuff around the umbilical cord. At 130 days gestation, the cuff was inflated for 10 min in 10 fetuses, causing complete umbilical cord occlusion (UCO). 5 UCO fetuses received intravenous melatonin maternally for 2 h, before and after UCO (UCO + melatonin). The remaining 5 fetuses had no UCO performed (sham-operated controls). At 48 h after UCO, the fetal brain was collected from each animal. Compared to controls, UCO caused significant hypoxia, hypercapnia and acidosis in UCO and UCO + melatonin fetuses. In the UCO-alone animals there were significant increases in pyknotic cell death, in the hippocampus (>7-fold) and the cerebellum (3-fold). Maternal melatonin administration ameliorated cellular pyknosis in UCO fetuses. UCO was also associated with astrogliosis, increased albumin uptake, activated microglia and lipid peroxidation. Melatonin prevented these effects. There were no significant differences in the number of brain macrophages or microglia between any of the groups. Following acute severe hypoxia in the late gestation fetus, melatonin reduces neuronal lipid peroxidation and prevents loss of blood-brain barrier integrity and astrogliosis. These are likely key mechanisms underlying the neuroprotective actions of melatonin in the fetal brain.