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Objective: The aim of this prospective multicenter randomized controlled trial was to compare the efficacy of silver nitrate cauterization against that of topical steroid ointment in the treatment of neonatal umbilical granuloma., Methods: An open-label, non-inferiority randomized controlled trial was conducted from January 2013 to January 2016. The primary endpoint for the silver nitrate cauterization and topical steroid ointment groups was the healing rate after 2 weeks of treatment, applying a non-inferiority margin of 10%. The healing rate was evaluated until completion of 3 weeks of treatment., Results: Participants comprised 207 neonates with newly diagnosed umbilical granuloma, randomized to receive silver nitrate cauterization (n = 104) or topical steroid ointment (n = 103). Healing rates after 2 weeks of treatment were 87.5% (91/104) in the silver nitrate cauterization and 82% (82/100) in the topical steroid ointment group group. The difference between groups was -5.5% (95% confidence interval, -19.1%, 8.4%), indicating that the non-inferiority criterion was not met. After 3 weeks of treatment, the healing rate with topical steroid ointment treatment was almost identical to that of silver nitrate cauterization (94/104 [90.4%] vs. 91/100 [91.0%]; 0.6% [-13.2 to 14.3]). No major complications occurred in either group., Conclusions: This study did not establish non-inferiority of topical steroid ointment treatment relative to silver nitrate cauterization, presumably due to lower healing rates than expected leading to an underpowered trial. However, considering that silver nitrate cauterization carries a distinct risk of chemical burns and that the overall efficacy of topical steroid ointment treatment is similar to that of silver nitrate cauterization, topical steroid ointment might be considered as a good alternative in the treatment of neonatal umbilical granuloma due to its safety and simplicity. To clarify non-inferiority, a larger study is needed.