Hypotonia is a common occurrence in pediatrics, especially in the neonatal period. The hypotonic neonate represents a diagnostic challenge for the general pediatrician because hypotonia may be caused by a lesion at any level in the neuraxis: (1) central nervous system (CNS), (2) peripheral nerves (PN), (3) neuromuscular junction, or (4) muscles. Distinguishing among these pathologies is a particularly arduous task. This review will discuss the clinical approach to neonatal hypotonia with emphasis on disorders of the peripheral nervous system and muscle, and the importance of the electrophysiological study as a diagnostic test.