Uchenna Ekwochi,1 D Chidiebere Osuorah,3 Ikenna K Ndu,1 Osita U Ezenwosu,2 Ogechukwu F Amadi,1 Ikenna C Nwokoye,1 O Israel Odetunde2 1Department of Pediatrics, Enugu State University Teaching Hospital, Parklane, Nigeria; 2Department of Pediatrics, University of Nigeria Teaching Hospital, Enugu, Nigeria; 3Child Survival Unit, Medical Research Council (UK), The Gambia unit, Fajara, The Gambia Background: Neonatal illnesses usually require long hospital stays and specialized care and/or facilities, which usually results in huge medical bills. With more than 70% of people in Nigeria living on less than US$2 per day, these bills are not affordable to many families' livelihoods. Aim: This study aims to determine the average cost of managing neonatal illnesses in Enugu in southeast Nigeria and the proportion of family income spent on these illnesses. It further seeks to ascertain the cost of various components in the management of neonatal diseases. Methods: This is a longitudinal and descriptive study involving 106 newborns admitted to the sick baby unit of the Enugu State University Teaching Hospital and the out-of-pocket medical expenditure in the management of their illnesses. Results: A hundred and six newborns participated in the study. All (100%) medical bills were out-of-pocket payments, and 103 (97.2%) of these were catastrophic health expenditure (more than 10% of total family monthly income). The average duration of hospital stay and cost of managing a neonatal illness was 12.86±8.81 days and ₦36,382±19,389.72 (US$223±119), respectively. This expenditure amounted to 157%, 71%, and 25% of total monthly family income for the low, middle, and upper socioeconomic class families, respectively, with a mean percentage of 85%. Families with a total monthly income of less than ₦10,000 (US$61), ₦10,000–49,999 (US$61–306), and ₦50,000–100,000 (US$306–612) and more than ₦100,000 (US$612) on average spent 683%, 108%, 54%, and 20% of their monthly income on their newborn's illness. Hospital and utility bills compared with bills accruing from drug and laboratory investigations account for a significantly larger proportion of total cost incurred in neonatal sepsis (₦23,499±14,987 [US$144±92], P=0.001), low birth weight (₦39,863±24,003 [US$224±147], P=0.001), severe anemia (₦40,504±13,923 [US$248±85], P=0.001), transient tachypnea of the newborn (₦10,083±1,078 [US$62±7], P=0.001), birth asphyxia (₦24,398±14,096 [US$149±86], P=0.001), and meningitis (₦26,731±7,675 [US$164±47], P=0.001), whereas cost for laboratory investigations was significantly higher for neonatal jaundice (₦11,690±3,169 [US$72±19], P=0.001). There was a strong positive correlation between duration of hospital stay and total medical cost incurred (r=0.897, P=0.001). Conclusion: Health expenditure on neonatal illness is high and leads to catastrophic expenditure for the majority of households in the state. There is a need for effective health insurance schemes to help subsidize and cushion this disastrous and impoverishing health expenditure on families for improved neonatal survival in Nigeria. Keywords: neonatal illness, out of pocket, health expenditure, Enugu State