In a study period of one year, 381 babies (38.7% of all nursery admissions) were clinically diagnosed to have sepsis. Of these, 156 (40.9%) had positive blood cultures. Klebsiella was by far the commonest organism isolated (41%) followed by other Gram negative organisms. Gram positive organisms were uncommon (8%). Sensitivity of Gram negative organisms was poor to penicillin (11%) and ampicillin (18%); significantly better to kanamycin (65%), gentamicin (74%) and best to cefotaxime (79%). Only 8% isolates were resistant to all antibiotics. Combination of cefotaxime and gentamicin was effective against 90% of the isolates (in vitro) as compared to 74% for gentamicin and ampicillin. In vivo, mortality in the cefotaxime treated group was significantly lower (24.3%) than control group (47%) although both groups were clinically and bacteriologically comparable (p less than 0.05).