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We assessed the value of existing guidelines for the evaluation of suspected congenital heart disease (CHD) in term neonates and propose a revised algorithm. Retrospective chart review of newborns referred for cardiac evaluation at a tertiary care center was performed. A total of 777 newborns qualified for the study. Among these, 3 critical and 8 major CHD were identified. The sensitivity of the combination of abnormal physical examination and pulse oximetry screening for major and critical CHD was 100%. The cost to detect a case of critical CHD, based on echocardiograms done for all abnormal electrocardiograms, was 3.4 times more than that incurred for performing this test on the basis of abnormal pulse oximetry and physical examination. Adding electrocardiogram to CHD screening increases cost without adding diagnostic yield. Based on our findings, we propose a revised algorithm for a systematic cost-effective approach to cardiac evaluation of term newborns with suspected CHD.