Premature children born with very low birth weight (VLBW) can suffer chronic hypoxic injury as a consequence of abnormal lung development and cardiovascular abnormalities, often leading to grave neurological and behavioral consequences. Emerging evidence suggests that environmental enrichment improves outcome in animal models of adult brain injury and disease, however, little is known about the impact of environmental enrichment following developmental brain injury. Intriguingly, data on socio-demographic factors from longitudinal studies that examined a number of VLBW cohorts suggest that early environment has a substantial impact on neurological and behavioral outcomes. In the current study, we demonstrate that environmental enrichment significantly enhances behavioral and neurobiological recovery from perinatal hypoxic injury. Using a genetic fate-mapping model that allows us to trace the progeny of GFAP+ astroglial cells, we show that hypoxic injury increases the proportion of astroglial cells that attain a neuronal fate. In contrast, environmental enrichment increases the stem cell pool, both through increased stem cell proliferation and stem cell survival. In mice subjected to hypoxia and subsequent enrichment there is an additive effect of both conditions on hippocampal neurogenesis from astroglia, resulting in a robust increase in the number of neurons arising from GFAP+ cells by the time these mice reach full adulthood.