BACKGROUND: Policy makers and programme managers require more detailed information on the cost and impact of packages of evidenced-based interventions to save newborn lives, particularly in South Asia and sub-Saharan Africa, where most of the world's 4 million newborn deaths occur. METHODS: We estimated the newborn deaths that could be averted by scaling up 16 interventions in 60 countries. We bundled the interventions in a variety of existing maternal and child health packages according to time period of delivery and service delivery mode, and calculated the additional running costs of implementing these interventions at scale (90% coverage) in sub-Saharan Africa and South Asia. The phased introduction and expansion of interventions was modelled to represent incremental strategies for scaling up neonatal care in developing country health systems. RESULTS: Increasing coverage of 16 interventions to 90% could save 0.59-1.08 million lives in South Asia annually at an additional cost of US dollars 0.90-1.76 billion. In sub-Saharan Africa, 0.45-0.80 million lives saved would cost US dollars 0.68-1.32 billion. Additional costs for increased antenatal interventions are low, but given relatively high baseline coverage and lower impact, fewer additional newborn lives can be saved through this package (5-10%). Intrapartum care has higher impact (19-34% of deaths averted) but is costly (US dollars 1.66-3.25 billion). Postnatal family-community care, with potential for high impact at low cost (10-27%, US dollars 0.38-0.75 billion), has been neglected. A first phase of scaling up care in 36 high (NMR 30-45) and 15 very high (NMR >45) mortality countries would cost approximately US dollars 0.56-1.10 and US dolars 0.09-0.17 billion annually, respectively, and would avert 15-32% and 13-29% of neonatal deaths, respectively, in these countries. Full coverage with all interventions in the 51 high and very high mortality countries would cost US dollars 2.23-4.37 billion, and avert 38-68% of neonatal deaths (1.13-2.05 million), at an extra cost per death averted of US dollars 1100-3900. CONCLUSIONS: Low-cost, effective newborn health interventions can save millions of lives, primarily in South Asia and sub-Saharan Africa. Modelling costs and impact of intervention packages scaled up incrementally as health systems capacity increases can assist programme planning and help policy makers and donors identify stepwise targets for investments in newborn health.