Background: During the past two decades there has been a sustained decline in child and infant mortality, however neonatal mortality has remained relatively unchanged. Almost all neonatal deaths (99%) occur in developing countries, where the majority are delivered at homes. Evidence suggests that these deaths could be prevented by simple, inexpensive practices and interventions during the pregnancy, delivery and postnatal period. In Pakistan over the last decade extensive efforts have been made by the international donors and government to implement these practices. However, limited attempts have been made to explore if these efforts have made a difference at the grass root level. This study assessed the burden of neonatal mortality and prevalence of practices for newborn care in a squatter settlement of Karachi, Pakistan. Methodology/Principal Findings: A community based cross-sectional study was performed. A pre-tested structured questionnaire was administered to 565 women who had recently delivered. Information was collected on neonatal morbidity, mortality and practices of women regarding care during pregnancy, child birth and for newborn, till 28th day of birth. Although 70% of women mentioned receiving antenatal care by a skilled provider, only 54.5% had four or more visits. Tetanus toxoid was received by 79% of women while only 56% delivered at a health care facility by a skilled attendant. Newborn care practices like bathing the baby immediately after birth (56%), giving pre-lacteals (79.5%), late initiation of breast feeding (80.3%), application of substances on umbilical cord (58%) and body massage (89%) were common. Most neonates (81.1%) received BCG injection and polio drops after birth. Neonatal mortality rate was 27/1000 live births with the majority of deaths occurring during the first three days of life. Conclusion: Even after years of efforts by government and nongovernmental sector to reduce newborn morbidity and mortality, inadequate antenatal care, home deliveries and unhealthy newborn care practices are highly prevalent. This leads us to important questions of why practices and behaviors have not changed. Who is responsible and what strategies are needed to bring this change?.