BACKGROUND: Oral azithromycin given during labour reduces carriage of bacteria responsible for neonatal sepsis, including Staphylococcus aureus. However, there is concern that this may promote drug resistance. OBJECTIVES: Here, we combine genomic and epidemiological data on S. aureus isolated from mothers and babies in a randomized intra-partum azithromycin trial (PregnAnZI) to describe bacterial population dynamics and resistance mechanisms. METHODS: Participants from both arms of the trial, who carried S. aureus in day 3 and day 28 samples post-intervention, were included. Sixty-six S. aureus isolates (from 7 mothers and 10 babies) underwent comparative genome analyses and the data were then combined with epidemiological data. Trial registration (main trial): ClinicalTrials.gov Identifier NCT01800942. RESULTS: Seven S. aureus STs were identified, with ST5 dominant (n = 40, 61.0%), followed by ST15 (n = 11, 17.0%). ST5 predominated in the placebo arm (73.0% versus 49.0%, P = 0.039) and ST15 in the azithromycin arm (27.0% versus 6.0%, P = 0.022). In azithromycin-resistant isolates, msr(A) was the main macrolide resistance gene (n = 36, 80%). Ten study participants, from both trial arms, acquired azithromycin-resistant S. aureus after initially harbouring a susceptible isolate. In nine (90%) of these cases, the acquired clone was an msr(A)-containing ST5 S. aureus. Long-read sequencing demonstrated that in ST5, msr(A) was found on an MDR plasmid. CONCLUSIONS: Our data reveal in this Gambian population the presence of a dominant clone of S. aureus harbouring plasmid-encoded azithromycin resistance, which was acquired by participants in both arms of the study. Understanding these resistance dynamics is crucial to defining the public health drug resistance impacts of azithromycin prophylaxis given during labour in Africa.