In Bangladesh, like other developing countries, most births occur at home or in the community, so logistic problems and taboos prevent the weighing of every newborn child. This study was performed to see whether other simpler measurements could be substituted for weight to identify neonates of low birth weight. A total of 1676 live births at the Chittagong Medical College Hospital constituted the study sample, and this showed a high correlation between mid-arm circumference and birth weight (r=0.792, p<0·000). A mid-arm circumference of <9·0 cm had the best sensitivity and specificity for identifying newborns with a birth weight of less than 2500 g. These neonates were followed up to record neonatal deaths. Neonatal mortality showed an inverse relation with mid-arm circumference. A mid-arm circumference of <9·0 cm and a birth weight of <2500 g were equally useful in predicting neonatal outcome. Mid-arm circumference is a simple, quick and reliable indicator for predicting low birth weight and neonatal outcome, and can be easily measured by medical practitioners and traditional birth attendants (TBAs) in the community of developing countries like Bangladesh.