INTRODUCTION: Sepsis is frequent and serious cause of liver dysfunction in neonates, neonatal sepsis induces synthetic liver dysfunction and coagulation abnormalities that may be indicators of sepsis before blood culture results. OBJECTIVE: This work aims to detect execretory and synthetic hepatic dysfunction in preterm neonates with positive blood culture to study the effect of sepsis on liver functions and compare between gram positive and gram negative pathogens causing sepsis regarding effect on liver functions and outcome. SUBJECTS AND METHODS: Our study included 100 preterm neonates who were divided in two groups: Group I, included 50 neonates who had positive blood culture results and group II, included 50 preterm neonates in whom all risk factors of sepsis were excluded by history, examination and laboratory investigations. Blood samples were taken from all neonates to measure; ALT, AST, ALP, GGT, TSB, DSB, TP. Albumin, PT, APTT and glucose levels. RESULTS: In our study we found that Klebsiella was the most common organism isolated from cases with positive blood culture, 21 out of 50 (42% of all septic neonates and 63.6% of neonates with gram negative bacteremia). In this study we found that 21.2% of neonates with gram negative bacteremia had abnormal ALT, 48.5% had abnormal AST, 87.9% had abnormal ALP and 97% had abnormal GGT levels while 5.9% of gram positive cases had abnormal ALT, 64.7% had abnormal AST, 70.6% had abnormal ALP and all cases had abnormal GGT levels. CONCLUSION: Gram negative bacteria more common than gram positive and Klebsiella is the most common isolated organism. Liver enzymes abnormalities are more common in preterm neonates with gram negative sepsis. Mortality rate among septic cases was 62%.