•Neonatal cortical activity organizes into transient network states.•These states have specific spectral and connectivity patterns.•Vigilance states and brain injury affect the dynamics of these transient network states.•Quiet sleep has more brain-wide neural synchronization compared to active sleep.•Brain injury is associated with lowered dynamics in the cortical networks. Early neurodevelopment is critically dependent on the structure and dynamics of spontaneous neuronal activity; however, the natural organization of newborn cortical networks is poorly understood. Recent adult studies suggest that spontaneous cortical activity exhibits discrete network states with physiological correlates. Here, we studied newborn cortical activity during sleep using hidden Markov modeling to determine the presence of such discrete neonatal cortical states (NCS) in 107 newborn infants, with 47 of them presenting with a perinatal brain injury. Our results show that neonatal cortical activity organizes into four discrete NCSs that are present in both cardinal sleep states of a newborn infant, active and quiet sleep, respectively. These NCSs exhibit state-specific spectral and functional network characteristics. The sleep states exhibit different NCS dynamics, with quiet sleep presenting higher fronto-temporal activity and a stronger brain-wide neuronal coupling. Brain injury was associated with prolonged lifetimes of the transient NCSs, suggesting lowered dynamics, or flexibility, in the cortical networks. Taken together, the findings suggest that spontaneously occurring transient network states are already present at birth, with significant physiological and pathological correlates; this NCS analysis framework can be fully automatized, and it holds promise for offering an objective, global level measure of early brain function for benchmarking neurodevelopmental or clinical research.