Data on CTX-M type extended-spectrum b-lactamase (ESBL) produced by Gram-negative bacteria by molecular methods are limited from India. This study was conducted to investigate the prevalence of CTX-M type ESBL producing Escherichia coli and Klebsiella pneumoniae from nosocomial isolates in a tertiary care hospital in southern India. A total of 179 clinical isolates of K. pneumoniae (n = 72) and E. coli (n = 107) were obtained in a period of 3 months and assessed for ESBL production phenotypically. Associated resistance to a panel of antibiotics and Minimum Inhibitory Concentration for 3rd generation cephalosporins was determined. Phenotypically ESBL positive isolates were subjected to PCR for bla CTX-M gene using two sets of primers for the simultaneous detection of all the five major groups of CTX-M types. All the positive isolates were then subjected to a group specific PCR to detect the prevalent group. Out of 179 isolates, 156 (87.1%) were positive for ESBL phenotypically, which includes 39.2% of K. pneumoniae and 60.8% of E. coli. All of them were examined by PCR using two primers for the presence of bla CTX-M genes. Among the 156 phenotypic positive isolates, 124 (79.4%) were positive for bla CTX-M genes, of which 45 (36.2%) were K. pneumoniae, 79 (63.7%) were E. coli. When the 124 positive clinical isolates were further tested with CTX-M group-specific primers, all were positive for the CTX-M-1 group. Our findings document evidence of the high prevalence of multidrug resistant CTX-M group 1 type ESBL among nosocomial isolates in this region. High co-resistance to other non-b-lactam antibiotics is a major challenge for management of ESBL infections. This is alarming and calls for the judicious use of carbapenems, especially in developing countries. This has significant implications for patient management, and indicates the need for increased surveillance and for further molecular characterization of these isolates.