The neurovascular coupling response has been defined for the adult brain but in the neonate non‐invasive measurement of local cerebral perfusion using NIRS or BOLD fMRI have yielded variable and inconsistent results, including negative responses suggesting decreased perfusion and localised tissue tissue hypoxia. Also, the impact of permissive hypercapnia (PaCO2 > 50 mmHg) in the management of neonates on cerebrovascular responses to somatosensory input is unknown. Using NIRS to measure changes in cerebral oxy‐ and deoxy‐haemoglobin (ΔoxyHb, ΔdeoxyHb) in 8 anaesthetised newborn lambs, we studied the cerebral haemodynamic functional response to left median nerve stimulation using stimulus trains of 1.8, 4.8 and 7.8 s. Stimulation always produced a somatosensory evoked response, and superficial cortical perfusion measured by Laser Doppler Flowmetry predominantly increased following median nerve stimulation. However, with 1.8 s stimulation, oxyHb responses in the contralateral hemisphere were either positive (i.e. increased oxyHb), negative, or absent; and with 4.8 and 7.8 s stimulations, both positive and negative responses were observed. Hypercapnia increased baseline oxyHb and total Hb consistent with cerebral vasodilatation, and 6 of 7 lambs tested showed increased Δtotal Hb responses after the 7.8 s stimulation; among which 4 lambs also showed increased ΔoxyHb responses. In 2 of 3 lambs, the negative ΔoxyHb response became a positive pattern during hypercapnia. These results show that instead of functional hyperaemia, somatosensory stimulation can evoke negative (decreased oxyHb, total Hb) functional responses in the neonatal brain suggestive of decreased local perfusion and vasoconstriction, and that hypercapnia produces both baseline hyperperfusion and increased functional hyperaemia. This article is protected by copyright. All rights reserved