Hyperbilirubinemia is one of the most common occurrence in newborns and is toxic to the brain, resulting in neurological sequelae such as auditory impairment, with potential to evolve to chronic bilirubin encephalopathy and long-term cognitive impairment in adults. In the early postnatal period, neurogenesis is rigorous and neuroinflammation is detrimental to the brain. What are the alterations in neurogenesis and the underlying mechanisms of bilirubin encephalopathy during the early postnatal period? This study found that, there were a reduction in the number of neuronal stem/progenitor cells, an increase in microglia in the dentate gyrus (DG) and an inflammatory state in the hippocampus, characterized by increased levels of IL-6, TNF-α, and IL-1β, as well as a decreased level of IL-10 in a rat model of bilirubin encephalopathy (BE). Furthermore, there was a significant decrease in the number of newborn neurons and the expression of neuronal differentiation-associated genes (NeuroD and Ascl1) in the BE group. Additionally, cognitive impairment was observed in this group. The administration of minocycline, an inhibitor of microglial activation, resulted in a reduction of inflammation in the hippocampus, an enhancement of neurogenesis, an increase in the expression of neuron-related genes (NeuroD and Ascl1), and an improvement in cognitive function in the BE group. These results demonstrate that microglia play a critical role in reduced neurogenesis and impaired brain function resulting from bilirubin encephalopathy model, which could inspire the development of novel pharmaceutical and therapeutic strategies.