Surgical neonates requiring prolonged parenteral nutrition (PN) are at risk for parenteral nutrition-associated liver disease (PNALD) that contributes to an increase in morbidity and mortality in surgical infants. Current lipid emulsions used with neonates are based on soybean oil (Intralipid 20 %) which is rich in omega-6 polyunsaturated fatty acids (PUFAs) with potential to increase inflammation and contribute to PNALD. A new fish oil based lipid emulsion (SMOFlipid 20 %) enriched with omega-3 polyunsaturated fatty acids has been proposed to reduce PNALD. The aim of this study was to assess the safety and efficacy of SMOFlipid 20 % in surgical neonates receiving parenteral nutrition (PN) compared with a soybean based emulsion (Intralipid 20 %). Forty-two surgical neonates were randomized to receive PN with either SMOFlipid 20 % (experimental group, n = 21) or Intralipid 20 % (control group, n = 21) for at least 7 days. The dosage of lipid emulsion was started at 0.5 g/kg/day on day 1 and was increased by increments of 0.5 g/kg/day daily up to 3 and 3.5 g/kg/day for term and pre-term neonates respectively, until it reached 50% of total energy intake. Safety and efficacy parameters were measured on day 0, 8, 15, and 22 if PN was continued. There were no significant differences in laboratory safety parameters (liver enzymes, lipid profiles, renal function and hematological parameters) and efficacy parameters (weight, head circumference and length) between the groups on day 22, whereas the mean and standard deviation of total bilirubin and direct bilirubin concentration were significantly lower in the SMOFlipid 20 % group than the Intralipid 20 % group: (3.21 ±1.99 mg/dL vs 0.99 ± 0.79 mg/dL and 2.54 ± 1.75 mg/dL vs 0.58 ± 0.52 mg/dL; P < 0.05). It is concluded that SMOFlipid 20 % is safe and well tolerated without causing adverse events and that it can decrease plasma bilirubin which may indicate a potential beneficial effect on cholestasis.