Background: Although under-five mortality declined appreciably in Bangladesh over the last few decades, neonatal mortality still remains high. The objective of the study is to assess the level and determinants of preterm birth and the contribution of preterm birth to neonatal mortality. Methods: Data for this study came from selected slums in and around Dhaka city, where; since 2015, icddr,b has been maintaining the Health and Demographic Surveillance System (HDSS). The HDSS data were collected by female Field Workers by visiting each household every three months; however, during the visit, data on Last Menstrual Period (LMP) were also collected by asking each eligible woman to ascertain the date of conception. Gestational age was estimated in complete weeks by subtracting LMP from the date of pregnancy outcome. In this study, 6,989 livebirths were recorded by HDSS during 2016-2018, and these births were followed for neonatal survival; both bivariate and multivariate analyses were performed. Results: Out of total births, 21.7% were born preterm (before 37 weeks of gestation), and sub-categories were: 2.19% for very preterm (28 to 31 weeks), 3.81% for moderate preterm (32 to 33 weeks), and 15.71% for late preterm (34 to 36 weeks). The study revealed that preterm babies contributed to 39.6% of neonatal deaths; however, the probability of death was very high on the 1st day of birth (0.124 for very preterm, 0.048 for moderate preterm, 0.024 for late preterm, and 0.013 for term birth), and continued until the 3rd day. In the regression analysis, compared to the term neonates, the odds of neonatal mortality were 8.74 (CI: 5.68, 13.45, p<0.01), 4.05 (CI: 2.64, 6.22, p<0.01) and 1.48 (CI: 1.05, 2.08, p<0.05) respectively for very, moderate, and late preterm birth categories. The population attributable fraction for neonatal mortality was 23%, and sub-categories were 14% for very preterm, 10% for moderate preterm, and 6% for late preterm. Conclusions: Although urban slums are in proximity to many health facilities, a substantial proportion of preterm birth contributed to neonatal deaths. So, pregnant women should be targeted, to ensure timely care during pregnancy, delivery, and post-partum periods to improve the survival of new-borns in general and preterm birth in particular.