This paper is concerned with the problem of stability and stabilization of neutral time-delay systems. A new delay-dependent stability condition is derived in terms of linear matrix inequality by constructing a new Lyapunov functional and using some integral inequalities without introducing any free-weighting matrices. On the basis of the obtained stability condition, a stabilizing method is also proposed. Using an iterative algorithm, the state feedback controller can be obtained. Numerical examples illustrate that the proposed methods are effective and lead to less conservative results. Copyright © 2008 John Wiley & Sons, Ltd.