In India, the eight socioeconomically backward states of Bihar, Chhattisgarh, Jharkhand, Madhya Pradesh, Orissa, Rajasthan, Uttaranchal and Uttar Pradesh, referred to as the Empowered Action Group (EAG) states, lag behind in the demographic transition and have the highest infant mortality rates in the country. Neonatal mortality constitutes about 60% of the total infant mortality in India and is highest in the EAG states. This study assesses the levels and trends in neonatal mortality in the EAG states and examines the impact of bio-demographic compared with health care determinants on neonatal mortality. Data from India’s Sample Registration System (SRS) and National Family and Health Survey (NFHS-2, 1998–99) are used. Cox proportional hazard models are applied to estimate adjusted neonatal mortality rates by health care, bio-demographic and socioeconomic determinants. Variations in neonatal mortality by these determinants suggest that universal coverage of all pregnant women with full antenatal care, providing assistance at delivery and postnatal care including emergency care are critical inputs for achieving a reduction in neonatal mortality. Health interventions are also required that focus on curtailing the high risk of neonatal deaths arising from the mothers’ younger age at childbirth, low birth weight of children and higher order births with short birth intervals.