A 22 months prospective study of neonatal gram-negative bacteremia was undertaken in a 15 bed NICU to find out the incidence and antibiotic resistance patterns. Clinically suspected 1326 cases of neonatal sepsis were studied during this period. More than 25% of the cases were microbiologically positive for sepsis. Among 230 (67.2%) cases of gram-negative bacteremia, the predominant isolates were Pseudomonas aeruginosa (38.3%), Klebsiella pneumoniae (30.4%), Escherichia coli (15.6%) and Acinetobacter sp. (7.8%). Fifty-nine per cent of the neonates were born in hospital while 41% were from community and referral cases. Lower respiratory tract infection, umbilical sepsis, central intravenous line infection and infection following invasive procedures were the most commonly identified sources of septicemia. Prematurity and low birth weight were the main underlying conditions in 60% of the neonates. Total mortality was 32%. Increased mortality was mainly associated with neutropenia, nosocomial infection and inappropriate antibiotic therapy. Resistance was increasingly noted against many antibiotics. The isolates were predominantly resistant to extended spectrum cephalosporins (25%-75%), piperacillin (68%-78%), and gentamicin (23%-69%). The commonest microorganisms causing gram-negative bacteremia were Pseudomonas aeruginosa followed by Klebsiella pneumoniae. The community-acquired bacteremia was mainly due to E. coli. The proportion of preterm and low birth weight babies was significantly high, and the major contributing factor in total mortality. Sensitivity to different antibiotics conclusively proved that a combination of ampicillin + sulbactam with amikacin or ampicillin + sulbactam with ciprofloxacin is most effective.