Chlamydial conjunctivitis was diagnosed by direct immunofluorescent monoclonal antibody staining of conjunctival smears in 46 of 100 consecutive neonates with conjunctivitis. The remaining 54 infants had bacterial conjunctivitis most commonly caused by Staphylococcus, Streptococcus, and Haemophilus species. A comparison of the direct test with chlamydial cultures demonstrated a sensitivity of 100% and a specificity of 94%, whereas Giemsa stain had a sensitivity of 42% and a specificity of 98%. Nineteen percent of infants treated with oral erythromycin for chlamydial infections in accordance with Centers for Disease Control guidelines had clinical and laboratory evidence of persistent chlamydial conjunctivitis. We conclude that Chlamydia trachomatis is a major cause of neonatal conjunctivitis that can be effectively and rapidly diagnosed by direct immunofluorescent monoclonal antibody staining of conjunctival smears. Further evaluation of treatment regimens appears to be warranted.