Birth asphyxia and its impact on neonatal mortality were observed in Khulna urban slum during July, 2010 to June, 2011. The descriptive type of cross sectional study was conducted on 132 neonatal deaths among 9373 live birth. The study has found that neonatal mortality rate is 14 (n=132) in the study area compared to birth rate (9373). Of 132 neonatal deaths, birth asphyxia is responsible for 52(39%), low birth weight 32(24%), neonatal sepsis 22(17%), premature delivery 10(8%), developmental malformation 7(5%), neonatal jaundice 2(2%), acute respiratory infection 1(1%), and others 6(4%). Out of total live birth (9373) birth asphyxia was 266(2.83%), among them cured cases were 214(2.28%) and death was 52(0.55%). About 7961 under facilitate delivery in hospital/clinic, the neonatal death was 90(68%) and comprises birth asphyxia death was 30(33%). But in 1412 home delivery, the neonatal death was 42(32%) and the asphyxia death was 22(53%). Their knowledge on birth asphyxia due to lack of any institutional education (20%) or primary to high school level education (70%) and also the economic status ranges from 1500-2200BDT/month (44%) or from 2300-3000BDT/month (42%) may be the main risk factors which play an important role in neonatal mortality. The awareness of facilitated delivery rather than home delivery may improve the birth asphyxia death rate in Bangladesh and help to achieve the millennium development goal.