Currently, there is no effective treatment for germinal matrix hemorrhage and intraventricular hemorrhage (GMH‐IVH), a common and often fatal stroke subtype in premature infants. Secondary brain injury after GMH‐IVH is known to involve blood clots that contribute to inflammation and neurological deficits. Furthermore, the subsequent blood clots disrupt normal cerebrospinal fluid circulation and absorption after GMH‐IVH, contributing to posthemorrhagic hydrocephalus (PHH). Clinically, GMH‐IVH severity is graded on a I to IV scale: Grade I is confined to the germinal matrix, grade II includes intraventricular hemorrhage, grade III includes intraventricular hemorrhage with extension into dilated ventricles, and grade IV includes intraventricular hemorrhage with extension into dilated ventricles as well as parenchymal hemorrhaging. GMH‐IVH hematoma volume is the best prognostic indicator, where patients with higher grades have worsened outcomes. Various preclinical studies have shown that rapid hematoma resolution quickly ameliorates inflammation and improves neurological outcomes. Current experimental evidence identifies alternatively activated microglia as playing a pivotal role in hematoma clearance. In this review, we discuss the pathophysiology of GMH‐IVH in the development of PHH, microglia/macrophage's role in the neonatal CNS, and established/potential therapeutic targets that enhance M2 microglia/macrophage phagocytosis of blood clots after GMH‐IVH.