Neonatal pneumothorax is a life-threatening emergency situation. Respiratory distress syndrome, meconium aspiration, birth trauma or positive pressure ventilation may cause pneumothorax in neonates. It may manifest as respiratory distress, hypoxemia or respiratory failure depending upon severity of pneumothorax and eventually may cause compromise of cardiac function. Early radiological diagnosis by chest radiograph, point of care Ultrasonography, emergency needle thoracocentesis and supportive care may improve the outcome of pneumothorax. In this case report, we present a case of a full-term new born baby who required positive pressure ventilation with Ambu-Mask, who developed severe respiratory distress in immediate postnatal period after resuscitation. Early diagnosis of pneumothorax with chest radiograph and ultrasonography was done. Pneumothorax lead to cardiac function compromise which necessitated emergency needle thoracocentesis. Intercostal drainage tube was placed and secured for denitive resolution. Hence, patient was stabilized because of timely diagnosis and expeditious intervention.