OBJECTIVES: To assess the effect of distance to emergency obstetric and newborn care (EmONC) services on early neonatal mortality in rural Ethiopia and examine whether proximity to services contributes to socio-economic inequalities in early neonatal mortality. METHODS: We linked data from the 2011 Ethiopian Demographic and Health Survey with facility data from the 2008 Ethiopian National EmONC Needs Assessment based on geographical coordinates collected in both surveys. Health facilities were classified based on the performance of nine EmONC signal functions (e.g. neonatal resuscitation, Caesarean section). We used multivariable logistic regression to assess the relationship between distance to services and early neonatal mortality. A decomposition approach was used to quantify the relative contributions of distance to EmONC services and other determinants to overall and socio-economic inequality in early neonatal mortality. RESULTS: In general, closer proximity to EmONC services and higher level of care were associated with lower early neonatal mortality. Living more than 80 km from the nearest comprehensive EmONC facility able to perform all nine signal functions compared to living within 10 km was associated with an increase of 14.4 early neonatal deaths per 1000 live births (95% CI: 0.1, 28.7). Closer proximity to a substandard EmONC facility compared with no facility was not associated with lower early neonatal mortality. Distance to EmONC services was an important determinant of early neonatal mortality, although it did not make a significant contribution to explaining socio-economic inequality. CONCLUSIONS: Our results suggest that recent initiatives by the Ethiopian government to improve geographical access to EmONC services have the potential to reduce early neonatal mortality but may not affect inequalities.