Microglia of the developing brain have unique functional properties but how their activation states are regulated is poorly understood. Inflammatory activation of microglia in the still-developing brain of preterm-born infants is associated with permanent neurological sequelae in 9 million infants every year. Investigating the regulators of microglial activation in the developing brain across models of neuroinflammation-mediated injury (mouse, zebrafish) and primary human and mouse microglia we found using analysis of genes and proteins that a reduction in Wnt/β-catenin signalling is necessary and sufficient to drive a microglial phenotype causing hypomyelination. We validated in a cohort of preterm-born infants that genomic variation in the Wnt pathway is associated with the levels of connectivity found in their brains. Using a Wnt agonist delivered by a blood-brain barrier penetrant microglia-specific targeting nanocarrier we prevented in our animal model the pro-inflammatory microglial activation, white matter injury and behavioural deficits. Collectively, these data validate that the Wnt pathway regulates microglial activation, is critical in the evolution of an important form of human brain injury and is a viable therapeutic target.