Background: In developing countries like Nepal, most of the births take place in the home, where high-risk care practices are common. This study is focused to find the efficacy of a community based intervention in newborn care practices and neonatal illness management in Morang district of Nepal. Methods: In Morang district of Nepal, intervention (base line & follow on) and non intervention (control) area were randomly selected. A community based program was launched in intervention area. The program mobilized the female community health volunteer (FCHV) to provide antenatal service (ANC), essential newborn care (ENC) and identify, assess and basic management of sick newborn. The survey included 624, 620 and 613 eligible married women of reproductive age (MWRA) in baseline (BSL), follow on (FON) and non intervention (NI) group respectively. During the survey, data regarding ANC services, clean and safe delivery, implementing ENC practices and managing ill babies were collected. The data, thus collected were analyzed using SPSS for windows. Results: The population characteristics of all the three groups; BSL, FON and NI were similar. The number of women receiving ANC service increased from 85.4% to 89% after intervention. The practice of home delivery was low in FON (64.8%) than BSL (69.6%) and NI (70.1%). In case of home delivery, presence of skilled and trained attendant increased to 60.6% with introduction of intervention program. The total illness rate in BSL, FON and NI groups were 41.2%, 38.2% & 29.7% respectively. The most commonly observed danger sign was respiratory problem 38.1%, 41.8% and 30.2% respectively in three groups. A significant improvement was seen in ENC practices of early breastfeeding, cord care, warming baby and delay in bathing practices in FON group (p<0.005). The fatality rate in FON group was low (3.2%) than BSL (14.1%) and NI (15.6%). Conclusion: Neonatal illness can be diagnosed and managed earlier if proper training is given to grass root level health worker. The intervention in Morang district showed the reduced neonatal fatality rate and this program can be extended in other rural areas of Nepal. [Sirjana Khanal, Weidong Zhang, Sudhir Khanal, The Efficacy of Community Based Intervention in Newborn Care Practices and Neonatal Illness Management in Morang District of Nepal. Life Science Journal 2010; 7(4): 60-67]. (ISSN: 1097-8135).