Congenital malaria is increasingly reported among babies born to mothers living in malaria endemic areas. The aim of this study was to determine the prevalence of congenital malaria among newborn babies delivered at Morogoro Regional Hospital, Tanzania. A cross-sectional study was conducted among 200 pregnant women attending delivery services at the hospital. Socio-demographic and obstetric information of the mothers was also collected. Samples of the placental, cord and peripheral blood smears of mothers and babies were stained with Giemsa and examined for malaria parasites. Plasmodiun falciparum was the dominant malaria parasite species. The prevalence of congenital malaria among newly born babies was 4.0% (95% CI, 1.2-6.8%). Prevalence of placental parasitaemia was 7.0% (95% CI, 3.3-10.7%), while prevalence of cord parasitaemia was 0.5% (95% CI, 0.0-1.5%). The prevalence of malaria among the mothers at delivery was 11.5% (95% CI, 6.9-16.1%). There was a strong association between placental, cord, maternal and congenital parasitaemia. All babies with congenital malaria had infected mothers and placentas (P<0.01). In conclusion, congenital malaria is still common in Tanzania especially in malaria endemic areas. It is important that blood smear from neonates are taken and examined for malaria parasite soon after birth. Malaria prevention measures such as intermittent preventive treatment, prompt management of all malaria cases and use of insecticide treated bed nets should be emphasized for all pregnant women.