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Prematurely born infants are deprived of maternal hormones and cared for in the stressful environment of Neonatal Intensive Care Units (NICUs). They suffer from long-lasting deficits in learning and memory. Here, we show that prematurity and associated neonatal stress disrupt dentate gyrus (DG) development and induce long-term cognitive deficits and that these effects are mediated by insulin growth factor-1 (IGF1). Nonmaternal care of premature rabbits increased the number of granule cells and interneurons and reduced neurogenesis, suggesting accelerated premature maturation of DG. However, the density of glutamatergic synapses, mature dendritic spines, and synaptic transmission were reduced in preterm kits compared with full-term controls, indicating that premature synaptic maturation was abnormal. These findings were consistent with cognitive deficits observed in premature rabbits and appeared to be driven by transcriptomic changes in the granule cells. Preterm kits displayed reduced weight, elevated serum cortisol and growth hormone, and higher IGF1 expression in the liver and DG relative to full-term controls. Importantly, blocking IGF-1 receptor in premature kits restored cognitive deficits, increased the density of glutamatergic puncta, and rescued NR2B and PSD95 levels in the DG. Hence, IGF1 inhibition alleviates prematurity-induced cognitive dysfunction and synaptic changes in the DG through modulation of NR2B and PSD95. The study identifies a novel strategy to potentially rescue DG maldevelopment and cognitive dysfunction in premature infants under stress in NICUs.