Late-onset neonatal sepsis is a significant cause of morbidity and mortality, and early detection could prove beneficial. Previously, we found that abnormal heart rate characteristics (HRC) of reduced variability and transient decelerations occurred early in the course of neonatal sepsis and sepsis-like illness in infants in a single neonatal intensive care unit (NICU). We hypothesized that this finding can be generalized to other NICUs. We prospectively collected clinical data and continuously measured RR intervals in all infants in two NICUs who stayed for >7 d. We defined episodes of sepsis and sepsis-like illness as acute clinical deteriorations that prompted physicians to obtain blood cultures and start antibiotics. A predictive statistical model yielding an HRC index was developed on a derivation cohort of 316 neonates in the University of Virginia NICU and then applied to the validation cohort of 317 neonates in the Wake Forest University NICU. In the derivation cohort, there were 155 episodes of sepsis and sepsis-like illness in 101 infants, and in the validation cohort, there were 118 episodes in 93 infants. In the validation cohort, the HRC index 1) showed highly significant association with impending sepsis and sepsis-like illness (receiver operator characteristic area 0.75, p < 0.001) and 2) added significantly to the demographic information of birth weight, gestational age, and days of postnatal age in predicting sepsis and sepsis-like illness (p < 0.001). Continuous HRC monitoring is a generally valid and potentially useful noninvasive tool in the early diagnosis of neonatal sepsis and sepsis-like illness.