End tidal Carbon dioxide monitoring was undertaken prospectively in all Ventilated neonates in our NICU admitted from March 1995 to August 1995 irrespective of the birth weight, gestational age and indication of ventilation. The aim was to determine the correlation between ETCO2 and PaCO2 in various clinical situations. The arterial blood gases were obtained in all ventilated babies with simultaneous and continuous ETCO2 monitoring and were analysed by AVL 995 Hb blood gas analyser. ETCO2 was analysed by side stream technique by Datex Cardiocap II monitor. A total of 152 samples from in-dwelling radial artery catheters were analysed from babies with birth weight from 900 g to 3400 g, gestation age from 28 to 42 wks and were ventilated for various indications like Severe Birth Asphyxia (SBA), Meconium Aspiration Syndrome (MAS), Recurrent Apnoea and Hyaline Membrane Disease (HMD). Statistical analysis was done in 10 groups to see if the ETCO2 correlated with its corresponding PaCO2 value. The study groups comprised three groups based on birth weight being < 1.5-2.5 kg and > 2.5 kg three groups as per the gestational age being 28-31+6 wks, 32-36+6 wks and 37-41+6 wks and four groups as per the need for ventilation being Severe Birth Asphyxia, Meconium Aspiration Syndrome, Apnoea of Prematurity and Hyaline Membrane Disease. Results of the correlation analysis revealed that the correlation coefficient in the study group ranged from 0.55 to 0.96 and was statistically significant in babies > 2.5 kg and 1.5-2.5 kg, in term and preterms 32-36 wks, and in babies with MAS, SBA and Recurrent Apnoea. The correlation coefficient was lowest in babies with HMD, being 0.55. The study showed that ETCO2 correlates closely with PaCO2 in most clinical situations in neonates and we recommend its use in all level III NICUs in ventilated babies.