The neonatal period is a critical stage for microbial colonization and immune system development, with dynamic changes in the microbiome closely linked to the pathogenesis of various diseases. Traditional microbiological testing methods have low sensitivity and time-consuming limitations compared to metagenomic next-generation sequencing (mNGS), which makes it difficult to meet the diagnostic and therapeutic needs of critically ill neonates. mNGS analyzes the total DNA in a sample without bias, allowing comprehensive identification of bacteria, viruses, fungi, and parasites, and resolution of functional genes, providing new avenues for precision diagnosis and treatment of diseases such as neonatal sepsis, necrotizing enterocolitis, neonatal pneumonia, neonatal meningitis, neonatal jaundice, and other diseases. However, challenges remain, including the need to optimize sample processing workflows and develop portable devices to enhance clinical conversion potential. In this review, we summarize the application, efficacy, and limitations of mNGS in neonatal diseases. This approach paves the way for novel avenues in mechanistic research, early diagnosis, and personalized therapy for these conditions.