Improving the quality of newborn care services and accelerating the service utilization of sick young infants is required to contribute to the reduction of neonatal mortality and improve the wellbeing of the newborns. The purpose of this study was to explore the effectiveness of neonatal healthcare services in the primary healthcare units in the north-west of Ethiopia and develop guideline for effective neonatal care. A mixed method approach with a sequential explanatory design was employed to explore factors affecting the effectiveness of the neonatal healthcare services. Interviewer-administered questionnaires were administered to 221 health workers and health extension workers in 142 health facilities; and service statistics abstracted for 767 sick young infants’ from the sick young infant registers. Data was entered in the EpiData 3.1, exported to SPSS and STATA for analysis. In the qualitative study, twenty-six participants from the health centers and health posts were interviewed through focus group discussions. Thematic analysis was undertaken to explore factors affecting neonatal healthcare services. Results: The quality of newborn care with the domains of newborn resuscitation, follow-up care after resuscitation and thermal care; immediate care and breastfeeding advice for very low birthweight babies were found to be moderate at primary hospitals and urban health centres; low at rural health centres and health posts. The availability of essential equipment is significantly associated with the quality of neonatal care provision in the health facilities (p < 0.05). More than forty percent of health facilities were not meeting the quality of case management tasks for sick young infants, and the newborn care knowledge of health providers is significantly associated with the quality of sick young infants’ management (p < 0.05). The sick young infants’ service utilisation was only 6.3 percent from the expected sick young infants’ population. Overall, the effectiveness of the neonatal healthcare services has a significant association with the health facilitates readiness [95%CI: 0.134-0.768]. Conclusion: The quality of neonatal healthcare provision is low to moderate; and the service utilization of sick young infants is very low. Thus, the rural health centers and health posts should be prioritised for the effective neonatal care. / Health Studies / D. Litt. et Phil. (Health Studies)