Objective Late-onset neonatal sepsis (LONS) remains a significant cause of neonatal morbidity and mortality, especially in developing countries. Our objective was to identify vitamin D deficiency in LONS, its association with maternal vitamin D deficiency, and its relationship with microbial profile and mortality in late-onset sepsis (LOS). Study design We conducted an analytical observational study with two matched groups (Group A and Group B) over 29 months, from November 2018 to March 2021, in the level III outborn neonatal unit at a tertiary-care centre in New Delhi, India. A total of 320 neonates were enrolled (160 septic, 160 non-septic). Outborn neonates aged 3 to 28 days were screened; those with LOS confirmed by sepsis screen or culture were enrolled as cases, while age-matched non-septic neonates were selected as controls. Epidemiological profiles, vitamin D status, and clinical outcomes, including sepsis severity and mortality, were compared between groups. Results Neonatal 25(OH) vitamin D levels in Group A (20.95±18.37 ng/mL) were significantly lower than those in Group B (25.09±16.21 ng/mL) (p < 0.001). Mothers of septic neonates had significantly lower 25(OH) vitamin D levels (25.0±16.21 ng/mL) than mothers of the non-septic group (29.86±14.13 ng/mL) (p = 0.001). Vitamin D deficiency was significantly more common in the sepsis group (40.6%) compared to the non-septic group (20.6%) (p < 0.001). Gram-negative and fungal sepsis (Acinetobacter, E. coli, Klebsiella, and Candida spp.) were associated with severe vitamin D deficiency. Mortality was 23.8% in the sepsis group, with significantly lower mean vitamin D levels among non-survivors (13.9±11.9 ng/mL vs. 23.3±19.6 ng/mL, p < 0.001). Receiver operating characteristic (ROC) analysis identified a 25(OH)D cutoff of 20.85 ng/mL (AUC 0.64) for predicting LOS. Conclusions Neonatal and maternal vitamin D deficiency is associated with an increased risk of LONS, particularly due to gram-negative and fungal pathogens, and correlates with higher mortality.