Background: Short interpregnancy interval (IPI) is among modifiable risk factors for maternal and neonatal adverse outcomes for planned pregnancies. It is potentially associated with adverse neonatal outcomes which are known to have considerable public health significance. In Ethiopia neonatal mortality was found to be high according to recent mini Ethiopian Demographic Health Survey Report. More importantly information about adverse neonatal outcomes in relation to interpregnancy interval is poorly described yet in Ethiopia. Objective: The aim of this study was to compare proportion of adverse neonatal outcomes and its associated factors among short and recommended interpregnancy interval of mothers who gave birth in Awi zone public hospitals, Amhara region, North West Ethiopia, 2020. Methods: Institution based comparative cross-sectional study was conducted in Awi zone public hospitals. A total of 482 mothers (241 with short and 241 with recommended IPI) were selected. The data was collected by using systematic random sampling technique through pretested structured questionnaire and entered in to Epi data version 3.1 then exported to Statistical Package of Social Science version 23.0 for analysis. Bivariable and multivariable logistic regression analyses was employed to estimate the crude and adjusted odds ratio with a confidence interval of 95% and P value of less than 0.05 considered statistically significant. Result: Among a total of selected mothers with short and recommended Interpregnancy interval (IPI) response rate was 237 (98.3%) and 238 (98.7%) respectively. Proportion of adverse neonatal outcomes were 37.1% and 20.6% among short and recommended IPI groups respectively. Factors such as, rural residence [AOR=6.9, 95%CI (3.32, 14.59)], and Cesarean section (C/S) delivery [AOR=3.4, 95%CI (1.18, 10.09)] were significantly associated with adverse neonatal outcomes in short IPI groups. Factors like rural residence [AOR=6.1, 95%CI (2.11, 17.7)], unintended pregnancy [AOR=5.3, 95%CI (1.11, 25.00)], rupture of membrane [AOR=6.89, 95%CI (2.54, 18.65)] and induction of labor [AOR=13.4, 95%CI (3.17, 21.77)] were significantly associated with adverse neonatal outcomes in recommended IPI groups. Conclusion: Urban residency and vaginal delivery were significantly associated with less risk of adverse neonatal outcomes in short IPI groups. Whereas urban residency, intended pregnancy status, spontaneous labor initiation and absence of ROM before labor were reported as a protective for adverse neonatal outcomes in recommended IPI mothers. According to this study, provision of proper health service coverage at rural area and minimizing C/S rate to reduce adverse neonatal outcome is highly recommended.