Our aim in the present study was to apply extrapolated DPOAE I/O-functions [J. Acoust. Soc. Am. 111, 1810-1818 (2002); 113, 3275-3284 (2003)] in neonates in order to investigate their ability to estimate hearing thresholds and to differentiate between middle-ear and cochlear disorders. DPOAEs were measured in neonates after birth (mean age = 3.2 days) and 4 weeks later (follow-up) at 11 test frequencies between f2 = 1.5 and 8 kHz and compared to that found in normal hearing subjects and cochlear hearing loss patients. On average, in a single ear hearing threshold estimation was possible at about 2/3 of the test frequencies. A sufficient test performance of the approach is therefore suggested. Thresholds were higher at the first measurement compared to that found at the follow-up measurement. Since thresholds varied with frequency, transitory middle ear dysfunction due to amniotic fluid instead of cochlear immaturity is suggested to be the cause for the change in thresholds. DPOAE behavior in the neonate ears differed from that found in the cochlear hearing loss ears. From a simple model it was concluded that the difference between the estimated DPOAE threshold and the DPOAE detection threshold is able to differentiate between sound conductive and cochlear hearing loss.