Background: Neonatal sepsis is among the leading causes of neonatal mortality. Due to limited laboratory services, the diagnosis is mainly based on clinical presentation. Signs and symptoms of neonatal sepsis are multiple and nonspecific. Blood culture is the gold standard for the diagnosis of neonatal sepsis. The demographic and obstetric factors associated with neonatal sepsis vary in facilities and locations. Therefore, we conceptualized the study to determine the factors that can independently predict the occurrence of neonatal sepsis. Methodology: A prospective cross-sectional study was conducted by recruiting neonates admitted to the neonatal ward with signs and symptoms of sepsis. The blood sample was collected for culture, and isolates were identified using conventional methods. Descriptive analysis was presented as frequencies and proportions. Univariate logistic regression analysis was used to analyze the factors associated with laboratory-confirmed neonatal sepsis. Multivariable logistic regression was performed to determine the independent predictors of neonatal sepsis. A p-value of less than 0.05 was considered statistically significant. Results. Two hundred seventy-nine neonates were recruited; 161(57.7%) were aged less than four days. Fever was the most common complaint in 72.4% of neonates among the 13 clinical features used to determine the clinical diagnosis of neonatal sepsis. Of 279 blood cultures performed, 198(71.0%) were culture-positive. In bivariate analysis, birth asphyxia, vaginal delivery, and foul-smelling liquor had increased odds of neonatal sepsis. However, neonatal sepsis was independently associated vaginal delivery. Neonates born through vaginal delivery had 2.57 times the adjusted odds of getting neonatal sepsis than those born by cesarean section (aOR = 2.57, 95% CI = 1.3–28.2, p= 0.021) Conclusion: Vaginal delivery was the only factor independently associated with laboratory-confirmed neonatal sepsis. There is a need for evalua