This paper focuses on the stability problem for a class of linear neutral systems with mixed neutral and discrete delays. A discretized. Lyapunov functional approach is developed for such kinds of systems. The resulting stability criteria are formulated in the form of a linear matrix inequality (LMI). These criteria are applicable to linear neutral systems with both small and non-small discrete delays. For nominal systems, the analytical results can be approached with fine discretization. For uncertain systems, the new approach is much less conservative. Numerical examples show significant improvement over approaches in the literature. (c) 2005 Elsevier Ltd. All rights reserved.