Prematurely-born infants cared for in the neonatal units suffer from memory and learning deficits. Prematurity diminishes neurogenesis and synaptogenesis in the hippocampal dentate gyrus (DG). This dysmaturation of neurons is attributed to elevated PSD95, NMDR2A, and IGF1 levels. Since oestrogen treatment plays key roles in the development and plasticity of DG, we hypothesized that 17β-estradiol (E2) treatment would ameliorate neurogenesis and synaptogenesis in the DG, reversing cognitive deficits in premature newborns. Additionally, E2-induced recovery would be mediated by IGF1 signalling. These hypotheses were tested in a rabbit model of prematurity and nonmaternal care, in which premature kits were gavage-fed and reared by laboratory personnel. We compared E2- and vehicle-treated preterm kits for morphological, molecular, and behavioural parameters. We also treated kits with oestrogen degrader, RAD1901, and assessed IGF1 signalling. We found that E2 treatment increased the number of Tbr2+ and DCX+ neuronal progenitors and increased the density of glutamatergic synapses in the DG. E2 treatment restored PSD95 and NMDAR2A levels and cognitive function in preterm kits. Transcriptomic analyses showed that E2 treatment contributed to recovery by influencing interactions between IGF1R and neurodegenerative, as well as glutamatergic genes. ERα expression was reduced on completion of E2 treatment at D7, followed by D30 elevation. E2-induced fluctuation in ERα levels was associated with a reciprocal elevation in IGF1/2 expression at D7 and reduction at D30. ERα degradation by RAD1901 treatment enhanced IGF1 levels, suggesting ERα inhibits IGF1 expression. E2 treatment alleviates the prematurity-induced maldevelopment of DG and cognitive dysfunctions by regulating ERα and IGF1 levels.