The overall purpose of the study was to identify key health system bottlenecks at the district level in achieving the MNCH (maternal neonatal and child health) related Millennium Development Goals and to cost out the marginal financial resources required to address them in three districts of Bangladesh. The goal was to assist the government in identifying cost-effective interventions in addressing some of the critical health system bottlenecks with particular focus on health equity and the needs of the disadvantaged population. The study, conducted exclusively on the public sector health service providers at the district level, adopted a mixed method approach. Using the Tanahashi model, the quantitative part attempted to identify the extent of the health system bottlenecks on human resources, accessibility, logistics, financing and utilization of services at the selected districts. The qualitative part dealt with the FGDs (focus group discussions) and in-depth interviews conducted on the government health personnel in order to better understand and analyze the bottlenecks. The World Bank developed MBB (marginal budgeting for bottlenecks) tool that was used to estimate the marginal cost of addressing these bottlenecks. The study identified human resource constraints—inadequate numbers, poor expertise, grossly uneven geographical distribution and lack of awareness as the most critical bottleneck affecting health systems at the district level. Inequity in the availability of accessibility to health care services was pronounced and manifested in different dimensions—geographical setup, socioeconomic status and gender. The marginal costs of addressing these bottlenecks are significant in the context of the total health expenditure in Bangladesh. Existing human resource policy needs to be revised to improve the overall quality of services. Allocation of additional resources and interventions should be district specific. Awareness programs need to be strengthened by using effective behavioral change and communication strategies. Moreover, special effort is required to address the equity issue. Key words: Health system, bottlenecks, millennium development goals.