The preterm birth has been increasing for the last decade. With the development of neonatal intensive care techniques, the survival rate of preterm infants is increased markedly. However, the brain of preterm infants is so vulnerable to injury that preterm brain injury has become an enormous public health problem. Hypoxia-ischemia and infection/inflammation are two main perinatal risk factors causing premyelinating oligodendrocyte and cortical neuron injury. Encephalopathy of prematurity is characterized by diffuse white matter injury and neuronal/axonal disruption, leading to neurological disabilities such as cognitive impairment and cerebral palsy. The advancement in imaging techniques, especially magnetic resonance imaging, provides more information for preterm brain injury and brain development, which contributes to the diagnosis and follow-up of the preterm infants. This article reviews the progress in encephalopathy of prematurity in order to open a new window to prophylaxis and management of this disease.