Production of extended spectrum beta-lactamase (ESBL) is one of the most important resistance mechanisms that hamper the antimicrobial treatment of infections caused by Enterobacteriaceae. Therefore, it is imperative to quantify the problem, and reinforce guidelines promoting appropriate antibiotic use. To determine the prevalence, risk factors and the outcome of antibiotic treatment among hospitalized adults with bacteremia caused by ESBL producing strains of E. coli and Klebsiella spp. Prospective cohort study Sequentially encountered patients bacteremias due to E. coli or Klebsiella spp. were prospectively followed up for 14 days from the diagnosis of bacteremia. Among the 131 bacteremic patients (62.6% nosocomially acquired), ESBL production was detected in 73.28% of the isolates of E. coli and Klebsiella spp. ESBL production was more common among isolates from patients with nosocomial infections than isolates from community acquired infections (85.37% versus 53.06%; p = < 0.001). Prior use of 3rd or 4th generation cephalosporins was associated with an increased risk of ESBL production (p = 0.017). A high degree resistance to multiple classes of antibiotics was noted. Carbapenems were the most active antibiotics in-vitro (imipenem susceptibility 99.2%). The commonest source of bacteremia was the urinary tract (45.04%). The 14-day mortality rate was 23.6%. There was no significant difference was seen in the mortality rate between E. coli and Klebsiella spp. infections, ESBL-producing and non-ESBL-producing strains, nosocomial and community acquired infections and among those treated with inappropriate antibiotics initially. This study shows a very high ESBL production and resistance to multiple classes of antibiotics, even among patients with community acquired infections caused by Enterobacteriaceae. The empiric use of 3rd and 4th generation cephalosporins should be curtailed, as cephalosporin use was associated with an increased risk of ESBL production. In view of their excellent in-vitro activity, carbapenems should be the initial empiric choice for serious life threatening infections caused by ESBL producing Enterobacteriaceae, with prompt de-escalation when culture and susceptibility results become available.