INTRODUCTION: Recent studies suggest that the urban advantage of lower neonatal mortality in urban compared with rural areas may be reversing, but methodological challenges include misclassification of neonatal deaths and stillbirths, and oversimplification of the variation in urban environments. We address these challenges and assess the association between urban residence and neonatal/perinatal mortality in Tanzania. METHODS: The Tanzania Demographic and Health Survey (DHS) 2015-2016 was used to assess birth outcomes for 8915 pregnancies among 6156 women of reproductive age, by urban or rural categorisation in the DHS and based on satellite imagery. The coordinates of 527 DHS clusters were spatially overlaid with the 2015 Global Human Settlement Layer, showing the degree of urbanisation based on built environment and population density. A three-category urbanicity measure (core urban, semi-urban and rural) was defined and compared with the binary DHS measure. Travel time to the nearest hospital was modelled using least-cost path algorithm for each cluster. Bivariate and multilevel multivariable logistic regression models were constructed to explore associations between urbanicity and neonatal/perinatal deaths. RESULTS: Both neonatal and perinatal mortality rates were highest in core urban and lowest in rural clusters. Bivariate models showed higher odds of neonatal death (OR=1.85; 95% CI 1.12 to 3.08) and perinatal death (OR=1.60; 95% CI 1.12 to 2.30) in core urban compared with rural clusters. In multivariable models, these associations had the same direction and size, but were no longer statistically significant. Travel time to the nearest hospital was not associated with neonatal or perinatal mortality. CONCLUSION: Addressing high rates of neonatal and perinatal mortality in densely populated urban areas is critical for Tanzania to meet national and global reduction targets. Urban populations are diverse, and certain neighbourhoods or subgroups may be disproportionately affected by poor birth outcomes. Research must capture, understand and minimise risks specific to urban settings.