BACKGROUND Ethiopia has achieved the fourth Millennium Development Goal by reducing under 5 mortality. Nevertheless, there are challenges in reducing maternal and neonatal mortality. The aim of this study was to estimate maternal and neonatal mortality and the socio-economic inequalities of these mortalities in rural south-west Ethiopia. METHODS We visited and enumerated all households but collected data from those that reported pregnancy and birth outcomes in the last five years in 15 of the 30 rural kebeles in Bonke woreda, Gamo Gofa, south-west Ethiopia. The primary outcomes were maternal and neonatal mortality and a secondary outcome was the rate of institutional delivery. RESULTS We found 11,762 births in 6572 households; 11,536 live and 226 stillbirths. There were 49 maternal deaths; yielding a maternal mortality ratio of 425 per 100,000 live births (95% CI:318-556). The poorest households had greater MMR compared to richest (550 vs 239 per 100,000 live births). However, the socio-economic factors examined did not have statistically significant association with maternal mortality. There were 308 neonatal deaths; resulting in a neonatal mortality ratio of 27 per 1000 live births (95% CI: 24-30). Neonatal mortality was greater in households in the poorest quartile compared to the richest; adjusted OR (AOR): 2.62 (95% CI: 1.65-4.15), headed by illiterates compared to better educated; AOR: 3.54 (95% CI: 1.11-11.30), far from road (≥6 km) compared to within 5 km; AOR: 2.40 (95% CI: 1.56-3.69), that had three or more births in five years compared to two or less; AOR: 3.22 (95% CI: 2.45-4.22). Households with maternal mortality had an increased risk of stillbirths; OR: 11.6 (95% CI: 6.00-22.7), and neonatal deaths; OR: 7.2 (95% CI: 3.6-14.3). Institutional delivery was only 3.7%. CONCLUSIONS High mortality with socio-economic inequality and low institutional delivery highlight the importance of strengthening obstetric interventions in rural south-west Ethiopia.