Intrauterine growth retardation (IUGR) is associated with neurological deficits including cerebral palsy and cognitive and behavioral disabilities. The pathogenesis involves oxidative stress that leads to periventricular white matter injury with a paucity of mature oligodendrocytes and hypomyelination. The molecular mechanisms underlying this damage remain poorly understood. We used a rat model of IUGR created by bilateral ligation of the uterine artery at embryonic Day 19 that results in fetal growth retardation and oxidative stress in the developing brain. The IUGR rat pups showed significant delays in oligodendrocyte differentiation and myelination that resolved by 8 weeks. Bone morphogenetic protein 4 (BMP4), which inhibits oligodendrocyte maturation, was elevated in IUGR brains at postnatal time points and returned to near normal by adulthood. Despite the apparent recovery, behavioral deficiencies were found in 8-week-old female animals, suggesting that the early transient myelination defects have permanent effects. In support of these in vivo data, oligodendrocyte precursor cells cultured from postnatal IUGR rats retained increased BMP4 expression and impaired differentiation that was reversed with the BMP inhibitor noggin. Oxidants in oligodendrocyte cultures increased BMP expression, which decreased differentiation; however, abrogating BMP signaling with noggin in vitro and in BMP-deficient mice prevented these effects. Together, these findings suggest that IUGR results in delayed myelination through the generation of oxidative stress that leads to BMP4 upregulation.