Facility based newborn care is gaining importance as an intervention aiming at reduction of neonatal mortality. To assess different factors that affect effectiveness of facility based newborn care on neonatal outcomes. Electronic search using key search engines along with search of grey literature manually. Observational and interventional studies published between 1966-Aug 2010 in English having a change in neonatal mortality as an outcome measure were considered. A total of 40 articles were fully reviewed for generating synthesized evidence. All were observational studies. The exposure variables that affected neonatal outcomes were grouped into three categories- regionalization of perinatal care (17 articles), strengthening of lower level neonatal facilities (12), and other miscellaneous factors (11). Regionalization played a key role in advancing newborn care practices. It increased in-utero transfer of high risk newborns and improved survival outcomes especially for very low birth weight neonates at level III facilities. It led to reduction in neonatal mortality owing primarily to enhanced survival of low birth weight infants. Strengthening of lower level units contributed significantly in reducing neonatal mortality. High patient volume (>2,000 deliveries/year), inborn status, availability of referral system and inter-facility transfers, and adequate nursing care staff in neonatal units also demonstrated protective effect in averting neonatal deaths. Countries investing in facility based newborn care should give impetus to establishing regionalized systems of perinatal care. Strengthening of lower level units with high case loads, can yield optimal reduction in NMR.