Abstract: Transient evoked otoacoustic emissions (TEOAEs) are not necessarily recordable in all healthy neonates, before discharge, due to transient conditions (such as vernix in ear canals). To determine the possibility and feasibility of screening of very young newborns before discharge from hospital (JCIH, 2007), it is important to know how vernix in external ear during this time affects screening results and how it should be managed. After establishing an interobserver agreement index , the presence of varying degrees of vernix among newborn and their TEOAE finding was studied in 112 full term medically stable newborns before 72 hours from birth or before discharge (whichever was early), and after 15 days from the time of first screen. Vernix was found in 52.2% ear canals of neonates from birth to 72 hours, which dropped to only 15.2% of non-occluding vernix after 15 days. Prevalence of occluding external canal vernix is 35.4% in well newborns 24 hours or younger and 29.4% in infants aged 48 to 72 hours. Since vernix in ear canal did not drop significantly before 72 hours of age, it is recommended that the screening may be undertaken after 15 days to overcome the problem of vernix. It was observed that 73 out of the total 79 ears that failed TEOAE screening had vernix. The presence of vernix significantly (X2=123.086, p<0.05) influenced the pass rate on TEOAE screening. 19.6% of ears had vernix and passed TEOAE while 32.6% had vernix and failed the screen. After 15 days 98.7% of previously referred ears passed the screen. Cleaning of vernix has been observed to improve pass rates from 76% to 91% (Chang et al, 1993) and 58.5% to 69% (Doyle et al, 2000), yet it is not practiced while screening. To overcome the problem of vernix it is also recommended that the reproductive and child health guidelines to include a system for clearing the ear as are for eyes.