White matter injuries (WMIs) are the leading cause of neurologic impairment in infants born premature. There are no treatment options available. The most common forms of WMIs in infants occur prior to the onset of normal myelination, making its pathophysiology distinctive, thus requiring a tailored approach to treatment. Neonates present a unique opportunity to repair WMIs due to a transient abundance of neural stem/progenitor cells (NSPCs) present in the germinal matrix with oligodendrogenic potential. We identified an endogenous oxysterol, 20-αHydroxycholesterol (20HC), in human maternal breast milk that induces oligodendrogenesis through a sonic hedgehog (shh), Gli-dependent mechanism. Following WMI in neonatal mice, injection of 20HC induced subventricular zone-derived oligodendrogenesis and improved myelination in the periventricular white matter, resulting in improved motor outcomes. Targeting the oligodendrogenic potential of postnatal NSPCs in neonates with WMIs may be further developed into a novel approach to mitigate this devastating complication of preterm birth.