The aim of this study was to investigate the effect of erythropoietin (EPO) on histological brain injury, subventricular zone (SVZ) expansion, and sensorimotor function deficits induced by hypoxia-ischemia (HI) in newborn rat pups. Seven-day-old male rat pups were divided into six groups: normoxia control, normoxia EPO, hypoxia control, hypoxia EPO, HI control, and HI EPO group. Sham surgery or HI was performed in all animals. HI was induced by ligation of the right common carotid artery followed by 90 min of hypoxia with 8% oxygen. Recombinant human EPO 3 U/g or saline was administered intraperitoneally, immediately, at 24- and 48-hr after insult. At two weeks after insult, animals were challenged with cylinder-rearing test for evaluating forelimb asymmetry to determine sensorimotor function. All animals were then sacrificed for volumetric analysis of the cerebral hemispheres and the SVZ. The saline-treated HI rats showed marked asymmetry by preferential use of the non-impaired, ipsilateral paw in the cylinder-rearing test. Volumetric analysis of brains revealed significantly decreased preserved ipsilateral hemispheric volume and increased ipsilateral SVZ volume compared with the sham-operated animals. Treatment of EPO significantly improved forelimb asymmetry and preserved ipsilateral hemispheric volume along with decreased expansion of ipsilateral SVZ following HI compared to the saline-treated HI rats. These results support the use of EPO as a candidate drug for treatment of neonatal hypoxic-ischemic brain damage.