Objectives To evaluate the association of short-term neurological improvement until day of life 4 in neonates with hypoxic-ischemic encephalopathy (HIE) receiving therapeutic hypothermia (TH) with neurodevelopmental outcome at 18-24 months. Methods This is a retrospective analysis of prospectively collected data of 174 neonates with HIE registered in the Swiss National Asphyxia and Cooling Register between 2011 and 2013. TH was initiated according to national guidelines, and Sarnat staging was performed daily. Short-term neurological improvement was defined if Sarnat stage improved from admission until day 4 of life. Standardized neurodevelopmental assessments were performed at 18-24 months. Unfavorable outcome was defined as death before 2 years of age or severe or moderate disability at follow-up. Results One hundred and sixty-four of 174 neonates (94%) received TH, of those 30 (18%) died in the neonatal period (no late mortality). Eighty-one percent of the survivors (109/134) were seen at 18-24 months. Of the 164 cooled neonates, 62% had a short-term neurological improvement, and the Sarnat score remained unchanged in 33%. Short-term neurological improvement was associated with an odds ratio (OR) of 0.118 [95% confidence interval (CI) 0.051-0.271] for an unfavorable outcome at 18-24 months. Conclusion Short-term neurological improvement predicts neurodevelopmental outcome at 18-24 months in the era of TH. Clinical examination must be part of a comprehensive evaluation for prognostication in HIE.