In developing countries, contamination of the umbilical cord may lead to omphalitis and create a risk of septicemic death. Studies in developed countries show that applying antiseptic solution to the cord may substantially lessen bacterial colonization, but whether this translates into less infection remains uncertain. This community-based, double-blind, placebo-controlled, cluster-randomized trial evaluated antiseptic treatment in 413 Nepalese communities. A total of 4934 infants were assigned to antiseptic treatment with 4% chlorhexidine, whereas 5107 others had the cord cleaned with soap and water and 5082 received dry cord care. The groups were well matched for socioeconomic, household, and maternal characteristics as well as for the use of clean cord practices, including handwashing and cord cutting. Newborn infants had the cord cleaned at home on days 1 to 4, 6, 8, and 10 and were followed up on postpartum days 12, 14, 21, and 28. Cord infection, defined as redness extending to the skin at the base of the umbilical stump, was 32% less frequent in antiseptic-treated infants than in those given dry cord care (incidence rate ratio [IRR], 0.68; 95% confidence interval [CI], 0.58–0.80). Defining infection as the presence of pus with moderate or severe redness or severe redness alone, the risk of infection with chlorhexidine treatment was 54% lower than with dry cord care (IRR, 0.46; 95% CI, 0.36–0.59). Using the most rigid definition of omphalitis—severe redness with pus—the risk was lowered 75% by antiseptic treatment (IRR, 0.25; 95% CI, 0.12–0.53). Cord treatment with soap and water had no apparent protective effect. Risk reduction with antisepsis was most evident when infants wee enrolled less than 24 hours after birth regardless of how omphalitis was defined. Compared with the dry cord care group, mortality risk was 24% lower in chlorhexidine-treated infants (relative risk, 0.76; 95% CI, 0.55–1.04). Benefit from antisepsis still was noted after adjusting for ethnicity, maternal literacy, and cord treatment with topical mustard oil. No protective effect from antisepsis was evident for infants enrolled in the study 24 hours or longer after birth. The risk of omphalitis may be markedly reduced by applying 4% chlorhexidine to the umbilical cord stump. This is a safe, relatively inexpensive measure that should be part of neonatal care programs in low-resource settings, replacing the current World Health Organization recommendation for dry cord car.