Hypoxic-ischemic encephalopathy remains a leading cause of neonatal mortality and disability. Experimental data suggest potential neuroprotective properties of xenon; however, the mechanisms and extent of its effect are not fully understood. The study aimed to evaluate the neuroprotective properties of a xenon-oxygen mixture in a neonatal ischemia-hypoxia rat model using MRI and follow-up neurological assessment. The experiment involved Wistar rat pups (n = 16). Neonatal ischemia-hypoxia was induced by the Rice–Vannucci method. Thirty minutes post-hypoxia, animals received the 60-min inhalation of either nitrogen-oxygen (control, n = 8), or 50/50 xenon-oxygen mixture (n = 8). Brain MRI was performed on day 7. In the xenon group, brain lesion volume was significantly reduced by 25% compared to controls on day 7 (p = 0.001). Neurological development was assessed from day 3 to 28 using a combination of behavioral tests. Xenon-treated animals demonstrated earlier formation of forelimb and hindlimb grasping reflexes (p = 0.025 and p = 0.005), better hindlimb placement and cliff avoidance on day 7 (p = 0.045 and p = 0.03), and better preserved auditory startle response on day 14 (p = 0.035). Thus, early administration of a xenon-oxygen mixture after ischemia-hypoxia exerts pronounced neuroprotection in newborn rats, confirmed by reduced brain damage and improved neurological outcomes.