The effectiveness of Neonatal Nurse Practitioner (NNPs) in a Level III Neonatal Intensive Care Unit (NICU) was evaluated by using a retrospective medical records review. Two groups of infants received care in a Transitional Care Unit (TCU), one by house officers and the second cared for by NNPs. Medical diagnoses, lengths of stay, hospital charges, discharge/transfer disposition and hospital readmissions were studied. No differences were found in DRG codes, discharge disposition, hospital readmission or number of infants transferred from TCU to NICU because of deteriorating condition. Though the infants cared for by the NNPs had significantly lower birth weight and lower gestational age, they averaged 2.4 fewer days in the hospital and $3,491 less in total hospital charges than the group cared for by house officers. This study confirms that NNPs can provide care comparable to house officers in a Level III NICU and be more cost effective.