Cerebral white matter injury during prenatal maternal infection characterized as periventricular leukomalacia is the main substrate for cerebral palsy (CP) in premature infants. Previously, we reported that maternal LPS exposure causes oligodendrocyte (OL)-injury/hypomyelination in the developing brain which can be attenuated by an antioxidant agent, N-acetyl cysteine (NAC). Herein, we elucidated the role of peroxisomes in LPS-induced neuroinflammation and cerebral white matter injury. Peroxisomes are important for detoxification of reactive oxidative species (ROS) and metabolism of myelin-lipids in OLs. Maternal LPS exposure induced selective depletion of developing OLs in the fetal brain which was associated with ROS generation, glutathione depletion and peroxisomal dysfunction. Likewise, hypomyelination in the postnatal brain was associated with decrease in peroxisomes and OLs after maternal LPS exposure. Conversely, NAC abolished these LPS-induced effects in the developing brain. CP brains imitated these observed changes in peroxisomal/myelin proteins in the postnatal brain after maternal LPS exposure. In vitro studies revealed that pro-inflammatory cytokines cause OL-injury via peroxisomal dysfunction and ROS generation. NAC or WY14643 (peroxisome proliferators activated receptor (PPAR)-alpha agonist) reverses these effects of pro-inflammatory cytokines in the wild-type OLs, but not in PPAR-alpha(-/-) OLs. Similarly treated B12 oligodenroglial cells co-transfected with PPAR-alpha siRNAs/pTK-PPREx3-Luc, and LPS exposed PPAR-alpha(-/-) pregnant mice treated with NAC or WY14643 further suggested that PPAR-alpha activity mediates NAC-induced protective effects. Collectively, these data provide unprecedented evidence that LPS-induced peroxisomal dysfunction exacerbates cerebral white matter injury and its attenuation by NAC via a PPAR-alpha dependent mechanism expands therapeutic avenues for CP and related demyelinating diseases.