The study was conducted to establish predictors of extended-spectrum beta-lactamase-producing Enterobacteriaceae (ESBL-PE) neonatal sepsis and mortality in a tertiary hospital, Tanzania. Between July and December 2016, blood culture was performed in neonates with clinical features of sepsis and neonates/mothers/guardians were screened for ESBL colonization. Selected isolates underwent whole genome sequencing to investigate relatedness. Logistic regression analysis was performed to determine predictors for ESBL-PE associated neonatal sepsis and mortality. Neonatal ESBL-PE sepsis was detected in 32(10.5%) of the 304 neonates investigated. Neonatal ESBL-PE sepsis was independently predicted by admission at the Intensive care Unit and positive mother and neonate ESBL-PE colonization. Deaths occurred in 55(18.1%) of neonates. Neonates infected with ESBL-PE, admitted at ICU, increased age and those transferred from other centres had significantly high mortality rates. Gram-negative bacteria formed the majority (76%) of the isolates, of which 77% were ESBL-PE. Virulent Klebsiella pneumoniae ST45 carrying bla_CTX-M-15 were commonly isolated from neonates. Klebsiella pneumoniae (ST45) were the predominant cause of ESBL-PE neonatal sepsis and mortality. Improved infection control and antibiotic stewardship are crucial in controlling the spread of resistant strains. Rapid diagnostic tests to detect ESBL-PE in low-income countries are needed to guide treatment and reduce ESBL-PE-associated mortality.