It was found by astronomer Mark Showalter by analyzing archived Neptune photographs the Hubble Space Telescope captured between 2004 and 2009.

[6] On a whim, Showalter decided to extend his analysis to regions beyond Neptune's ring system; he then found Hippocamp as a faint but unambiguous white dot.

[5] Follow-up Hubble observations of Hippocamp were conducted by Showalter in 2016, and the moon was later given its permanent Roman numeral designation by the Minor Planet Center after its recovery.

This is further evidenced by accounting for the moons' respective outward orbital migration rates, which also suggests that Hippocamp and Proteus were much closer together in the past.

[10][14] Based on this evidence, Showalter and colleagues proposed that Hippocamp may have originated from debris ejected from Proteus by the cometary impact that formed its largest crater, Pharos.

[6] However, Hippocamp only accounts for two percent of the missing volume of material generated by the Pharos impact event, and the reason for the absence of the rest of the debris remains unknown.

[22] As with the other small inner moons of Neptune, Hippocamp is thought to have been repeatedly disrupted by comet impacts after it had coalesced from debris ejected from Proteus.

[16] Proteus has since receded over 11,000 km (6,800 mi) from Neptune owing to tidal interactions with the planet, while Hippocamp remained close to its initial position where it formed as it migrates more slowly due to its smaller size.

[6][14] Based on Hippocamp's estimated apparent magnitude of 26.5, its diameter was initially thought to be around 16–20 km (10–12 mi), but more recent observations revise this value upward two-fold.

[6][24] The Hubble Space Telescope's NICMOS instrument has examined Neptune's large inner moons in the near-infrared, and has found evidence that similar dark, reddish material, characteristic of small outer Solar System bodies, appears to be present on all their surfaces.

[25] Water ice, abundant in the outer Solar System, is believed to be present, but its spectral signature could not be observed (unlike the case of small Uranian moons).

[26] Hippocamp completes one revolution around Neptune every 22 hours and 48 minutes (0.95 days), corresponding to a semi-major axis, or orbital distance of 105,283 km (65,420 mi).

[28] Compared to Hippocamp, Proteus migrates at a faster rate due to its higher mass and thus stronger tidal interaction with Neptune.

Based on its orbital migration rate, Proteus is estimated to recede about 40 km (25 mi) from Neptune in 18 million years, in which it will enter a true 11:13 resonance with Hippocamp.