The mineral compound, also known as Epsom salts, is already used to treat pregnancy-related high blood pressure and to stop early labour.
Doctors should consider giving it to women about to deliver an extremely pre-term infant, said one of the researchers, Dr John Thorp of the University of North Carolina.
"It's cheap. It's readily available. It doesn't harm anybody. I think it will be widely adopted," Thorp said.
The research was led by Dr Dwight Rouse at the University of Alabama at Birmingham, who was presenting it at a meeting of the Society for Maternal-Foetal Medicine in Dallas.
Cerebral palsy is a serious complication of premature birth. It is caused by damage to the part of the brain that controls movement and results in poor muscle control and coordination.
Thorp said it is not clear how magnesium sulphate works, but it is thought to open up blood vessels in the newborn's brain.
In the government-funded study, researchers gave an infusion of magnesium sulphate to women about to give birth to a premature baby to see if it would reduce the risk of cerebral palsy. Enrolled in the study were 2,241 women who were 24 to 31 weeks pregnant. Infants born before 37 weeks are considered premature.
Most of the women were in early labour because their water broke.
They were given either the compound or a fake solution. The infants were examined for signs of cerebral palsy at birth and over the next two years.
Of the babies who survived, moderate or severe cerebral palsy occurred in about 2 percent of those in the treatment group compared to about 4 percent of those whose mothers did not get the compound.
The number of infants who died was about the same in both groups.
"Cerebral palsy is not a terribly common outcome in pre-term infants but when it does happen, it's devastating," said Dr Judy Aschner, chief of neonatology at Vanderbilt Children's Hospital, who was not involved in the study.
She said doctors will want to see the details on side effects when the study is published before making any changes in the care of mothers in pre-term labour.
Magnesium sulphate acts like a sedative and can make moms and infants groggy and sleepy, she said.
"This is a really important study and potentially one that could change general practice," Aschner said.
In another study presented at the conference, researchers found that women who take folic acid for at least a year before they become pregnant may reduce their chances of early premature birth by 50 to 70 percent. Taking folic acid is already recommended for women of childbearing age to prevent birth defects to the brain and spinal cord, such as spina bifida.
"Here we have an added reason to motivate women to take it and to take it early in their lives," said Dr Alan Fleischman, medical director of the March of Dimes. The group was giving the research an award at the Dallas meeting. – (Sapa-AP)