Neonatal sepsis is a major contributor to neonatal mortality in India. Blood culture, the gold standard for the diagnosis of sepsis takes 48-72 h while the serological markers have suboptimal diagnostic test characteristics. Perfusion index (PI) is a real time, non-invasive marker that can detect microcirculatory changes before other clinical manifestation of sepsis. To determine the diagnostic accuracy of PI in detecting hospital-acquired sepsis before overt clinical manifestations. A prospective observational study conducted in the Neonatal Intensive Care Unit (NICU) of a tertiary care hospital. Preterm neonates admitted to NICU. PI was continuously monitored in all enrolled neonates. Clinical sepsis was defined using the NeonatalKrankenhaus-Infektions-Surveillance-System (NeoKISS). The time of fall of PI below 0.88 and time of clinical sepsis as per NeoKISS were noted and the difference was calculated. Among 65 preterm neonates (gestational age: 31.5 ± 2.6 weeks, birth weight: 1350, IQR 1100-1700 g), a total of 86 events of suspected sepsis were noted, of which 69 were sepsis screen positive. Fifteen events were associated with culture positive sepsis. PI yielded a sensitivity of 89.47% (95% CI 78.48-96.04%), specificity of 56% (95% CI 34.93-75.60%), positive predictive value of 82.26% (95% CI 74.70-87.92%) and negative predictive value of 70% (95% CI 50.36-84.29%) in detection of hospital-acquired sepsis. PI might serve as an early, non-invasive marker of hospital-acquired sepsis in preterm neonates.