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One of the Millennium Development Goals (MDG-4) is to reduce child mortality by up to two-thirds by 2015. In most developing countries, a higher proportion of neonatal deaths are observed. We quantify the causes of neonatal morbidity and mortality at a rural hospital. A retrospective review of consecutive neonatal admissions to Empangeni Hospital, between January and December 2005, was conducted. Of 1,573 admissions, male babies made up 57.8% of admissions and 63% of the deaths. The most common causes of admission were birth asphyxia (38.2%), prematurity (23.5%), and infection (21%). The average length of stay was 9.2 days (SD 12 days). The overall mortality rate was 13.8% but higher (23.4%) among the referred babies. Admission and death rates of low birthweight babies (<2,500g) were 53% and 84%, respectively. Two-thirds (67.7%) of those babies who died were born preterm. Over half (56.6%) of the deaths took place within the first three days of life. Logistic regression showed that extremely low birthweight (OR=13.923, 95% CI:5.759; 33.656), male sex of the babies (OR=1.633, 95% CI:1.132; 2.356), and preterm delivery (OR=2.975, 95% CI: 1.296; 6.836) were significant predictors of neonatal death. A substantial proportion of neonatal mortality occurs in the hospital neonatal unit. Asphyxia, prematurity, low birthweight and neonatal infection are the leading cause of neonatal hospitalisation and deaths. Several simple and effective interventions exist to minimise neonatal admissions and deaths in South Africa. [ABSTRACT FROM AUTHOR]