In recent years there has been a growing body of evidence from laboratory and clinical studies that at least 2% of newborns have been exposed to an asphyxial insult during labor and delivery, which may affect their outcome. Despite all the progress achieved in obstetric and neonatal care, intrapartum fetal asphyxia is still a major cause of hypoxicischaemic brain injury in term newborns such the one caused by pre-eclampsia, a complication of pregnancy that can cause birth asphyxia at or near term, due to influence on uteroplacental circulation, resulting in brain damage. Up to now it has not been possible to assess fetal brain function directly while the membranes are intact. Several indirect methods are in clinical use such as cardiotocography, biophysical profile, amniotic fluid examination, Doppler sonography, hormone analysis, and ultrasound investigations of fetal growth and movements. During the last decade fetal magnetoencephalography (MEG) has been developed as a useful screening tool for detection of severely neurologically damaged fetuses due to its ability to record brain activity without direct contact with the head as well as to the transparency of magnetic signals in passing through extracerebral fetal layers and through the mothers abdomen. Few studies in the literature refer to neonatal MEG. This article provides an overview of the uses and limitations of fetal and neonatal MEG, especially in the detection of brain damage due to perinatal hypoxia.