Neonates are a very vulnerable group to adverse drug reactions due to immaturity of their body functions. So, great care needs to be taken to prescribe drugs to them. Recent advances in prenatal care have resulted in an increase in drug exposure rates in pregnant mothers, causing infants to be exposed to aptitude of different drugs, even when in utero. Advances in medical technology have also resulted in improved survival rates in both term and preterm infants, including high risk and low birth weight infants. Because of these changes in the medical ABSTRACT Background: Sick and pre-term neonates are admitted in neonatal intensive care units (NICU) and treated. A great care needs to be taken to use drugs in neonates due to the immaturity of their body functions. There is a lack of standard drug prescribing guideline in children, especially neonates because; safety and efficacy for a majority of drugs have not been established in them. The objectives of the study were to evaluate the drug utilization pattern in NICU of a teaching hospital and to identify problems in drug utilization and suggest measures, if needed. Methods: A prospective, observational study was carried out in NICU for duration of one year. Demographic details like age, sex, birth weight, duration of hospitalization was recorded from the case files of neonates. The morbid condition, treatment with drugs and other supportive modalities were recorded. The outcome of treatment was also noted. WHO drug utilization core indicators were also evaluated. Results: Out of 623 admissions in NICU, 56% were males. There were 56% of neonates who were born pre-term. The maximum used drugs were Vitamin K (73%) and antibiotics (64%). The antibiotics were mainly from penicillin and aminoglycoside groups. Respiratory distress syndrome (19%) and neonatal sepsis (16%) were the most common causes for admission. Out of total admissions, 64% were discharged following recovery, while, 12% had expired. Conclusions: Drugs usage in neonates should be minimal and should be prescribed from essential drug list. Antibiotic policy needs to be formulated for hospitals to minimize antibiotic usage and prevent development of resistance.