Aminoglycoside is a widely used antibiotic in neonatal age group at hospital setting in Bangladesh. It has underlying side effect and toxicity which is mostly unseen and ignored. The aim of the study was to evaluate the nephrotoxic effect of aminoglycoside in neonates. This study was conducted in fifty hospital admitted neonates of Dhaka Shishu Hospital from January 2012 to December 2013. Serum creatinine, blood urea nitrogen, and fractional excretion of magnesium (FEMg) were measured before starting and after seven days of aminoglycoside treatment. Statistical analyses of the results were obtained by window-based computer software devised with Statistical Packages for Social Sciences (SPSS version 16). Statistical tests for significance of difference were done using Student's paired t-test. Serum creatinine and blood urea nitrogen were not significantly changed after drug administration (P = 0.092, P = 0.247, respectively). None of the neonates in our study group had abnormal serum creatinine and blood urea nitrogen after aminoglycoside therapy. FEMg was significantly increased (P <0.001) after aminoglycoside treatment. In this study, conventional renal function test such as blood urea and serum creatinine did not reflect the nephrotoxicity of aminoglycoside. However, a biomarker of tubular damage, FEMg detected nephrotoxicity of aminoglycoside therapy.