Background: Acute encephalitis syndrome (AES) is an important cause of mortality and morbidity in children. We undertook this study for better understanding of predictors of outcome in terms of neurological sequalae in children with AES. Methods: It was a prospective observational study. We studied 100 patients of AES admitted in PICU of Maharaja Yeshwantrao Hospital Indore from June 2021 to July 2022. WHO case definition of AES was adopted while enrolling cases. All the demographic details, clinical characteristics and laboratory parameters were noted in a predesigned proforma. We evaluated their clinical characteristics, laboratory features and outcomes at the time of discharge. Modified Rankin Scale was used to assess the neurological disability at the time of discharge. Outcomes were assigned score between 0 and 6.The outcome was correlated with above mentioned variables. Results: Out of 100 patients, 54/100(54%) patient high mRS score of 5 and 6(poor outcome) 12/100(12%) of the patients had score of 3-4 and 34/100(34%) patients had mRS score of 0-2(good outcome). Low GCS at admission, shock and inotrope requirement and need of mechanical ventilation were significantly asscociated with high mRS and poor outcome. Deranged Biochemical parameters like blood glucose abnormalities, deranged liver enzymes and deranged electrolytes were associated with high mRS and poor outcome. Conclusions: This study explains correlation of clinical presentation, laboratory parameters and therapeutic intervention required with neurological outcome of AES. Low Glasgow coma score, deranged biochemical parameters, Shock and inotrope requirement and need of mechanical ventilation are predictors of a poor outcome.