INTRODUCTION: This study compared the effectiveness and safety of neem (Azadirachta indica) seed oil methanolic extract shampoo against permethrin shampoo in reducing head lice infestation among children. METHODS: A single-blind, non-inferiority, randomized clinical trial was conducted on children aged 6-14 years with pediculosis. Using block randomization, the participants were assigned to receive either 10% neem seed oil methanolic shampoo, 1% permethrin shampoo, or pure shampoo for three treatment applications at 10-day intervals. The presence of head lice after each application was determined by standard quadrant counting and compared with the baseline count within and among treatment groups. RESULTS: There was a statistically significant difference in lice count after treatment for both neem and permethrin, with mean reductions of 17.8 ± 23.97 (p = 0.043) and 22.5 ± 23.47 (p = 0.014), respectively. Repeated Measures ANOVA showed a summary p-value of 0.041 for neem, 0.013 for permethrin, and 0.193 for the shampoo alone with a linear trend indicating a significant decrease in the lice counts from the baseline to the third application of neem and permethrin shampoo, but not in the shampoo group. There was no significant difference in the mean decrease in lice count from baseline to the third application between the neem and permethrin shampoo groups. CONCLUSION Neem seed oil methanolic extract shampoo is non-inferior and comparable to permethrin in the reduction of head lice count. There were no reported dermatologic adverse effects such as burning sensations, redness, skin irritation, and allergic reactions.