ObjectiveTo examine the pattern and incidence of sepsis occurring in neonatal units in Australia.DesignA one‐year prospective study of babies with systemic sepsis within 48 hours of birth (early‐onset sepsis) or after this time (late‐onset sepsis) in seven Australian neonatal units. Systemic sepsis was defined as clinical sepsis, plus either positive bacterial or fungal culture of blood and/or cerebrospinal fluid, or group B streptococcal antigen detected in the urine.ResultsThere were 241 episodes of sepsis, affecting 234 babies. One quarter (61) were early‐onset, a rate of 2.2 per 1000 live births. Group B streptococcus (GBS) was the commonest cause of early‐onset sepsis, with a rate of 1.3 per 1000 live births. The incidence of early‐onset GBS sepsis was lower at a hospital which screened for maternal carriage and used intrapartum antibiotic prophylaxis for all carriers. The rate of late‐onset sepsis was 4.4 per 1000 live births and coagulase‐negative staphylococci were the commonest cause. Meningitis occurred in 23% of babies with early‐onset and in 10% with late‐onset sepsis. The mortality from early‐onset sepsis was 15%, and from late‐onset sepsis was 9%. There were no major regional variations, other than for GBS.ConclusionsThe incidence of and mortality from neonatal sepsis is comparable to other countries, and shows no major regional varia‐tion. The use of intrapartum antibiotics may reduce the incidence of neonatal GBS sepsis. There are no previous comparable data on neonatal infections in Australia.