BACKGROUND: Ethiopia is a Sub-Saharan country with very high neonatal mortality rates, varying across its regions. The rate of neonatal mortality reduction in Ethiopia is slow, and Ethiopia may not meet the third United Nations sustainable development target by 2030. This study aimed to investigate the spatial variations and contributing factors for neonatal mortality rates in Ethiopia. METHODS: We analysed data from the 2016 Ethiopian Demographic and Health Survey (EDHS), which used a two-stage cluster sampling technique with a census enumeration area as primary and households as secondary sampling units. A Bayesian spatial logistic regression model using the Stochastic Partial Differential Equation (SPDE) method was fitted accounting for socio-economic, health service-related and geographic factors. RESULTS: Higher neonatal mortality rates were observed in eastern, northeastern and southeastern Ethiopia, and the Somali region had higher risks of neonatal mortality. Neonates from frequently drought-affected areas had a higher mortality risk than less drought-affected areas. Application of traditional substances on the cord increased the risk of neonatal mortality (Adjusted Odds Ratio (AOR) = 2.07, 95% Credible Interval (CrI): 1.12 to 4.30) and getting health facility delivery services had a lower odds of neonatal mortality (AOR = 0.60, 95% CrI: 0.37, 0.98). CONCLUSIONS: Residing in drought-affected areas, applying traditional substances on the umbilical cord and not delivering at health facilities were associated with a higher risk of neonatal mortality. Policy-makers and resource administrators at different administrative levels could leverage the findings to prioritise and target areas identified with higher neonatal mortality rates.