A review was made of 195 peripheral blood smears of 157 neonates who required sepsis work-up in the first month of life. Degenerative changes of neutrophils including vacuolization and toxic granulation were observed frequently in infants with culture-proven bacterial sepsis. Of 21 peripheral blood smears from 20 neonates subsequently proven to have bacterial infection, 17 had vacuolization present in the neutrophils for a sensitivity of 81%, a specificity of 93%, and a positive predictive accuracy of 59%. Toxic granulation changes in neutrophils showed similar results. This simple test can be performed easily in all hospitals; it does not require special laboratory facilities. The test appears to provide a valuable adjunct in the early detection of neonatal bacterial infection.