Nosocomial infections are a significant problem in neonatal intensive care units (NICUs) and hand hygiene (HH) has been stated as an effective mean to prevent spread of infections. The aim of study was to assess the baseline compliance HH practices and to evaluate the impact of hand washing educational programme on infection rate in a NICU. Continuous surveillance of nosocomial infections was done. A total of 15 797 and 12 929 opportunities for HH were observed in pre-intervention and postintervention phases, respectively. Compliance of health-care workers for all HH opportunities combined was 46% before intervention and improved significantly to 69% in postintervention (RR 1.49, CI 1.46–1.52, P < 0.0001). Compliance for nurses and doctors was similar. Nosocomial sepsis rate showed a significant decline from 96 per 1000 patient-days in pre-intervention to 47 per 1000 patient-days in postintervention phase (RR 0.44, CI 0.33–0.58, P < 0.0001). We conclude that effective HH practices can serve as an economical and effective nosocomial infection control approach especially important in developing nations.