Background: Multidrug resistance and production of extended spectrum β-lactamases (ESBLs) by enteric gram-negative rods in hospitals and community continue to be worsened. We aimed to characterize the multidrug resistance and determine the prevalence of ESBL production by clinical isolates of Enterobacteriaceae in southeast Iran. Methods: Gram-negative bacteria isolated from clinical samples of hospital inpatients and outpatients from three hospitals in southeast Iran were tested for susceptibility to 10 commonly used antimicrobials. For 500 isolates which showed resistance to ≥3 antibiotics from different classes, minimum inhibitory concentration, and prevalence of ESBL production were determined by agar dilution and double disc synergy method respectively. The isolated bacterial species were compared in respect of antibacterial resistance, ESBL production, patients' gender, hospital ward, and type of specimen. Results: The most frequent resistance was to trimethoprim/ sulfamethoxazole, amoxicillin, and tetracycline. Imipenem with 99.8% and ceftizoxime with 83% susceptibility were the most active agents. A total of 53.8% of isolates expressed ESBL production. Escherichia coli and Klebsiella pneumoniae were most common in outpatients, and inpatients samples respectively. Higher rate of resistance to most antibacterial agents and ESBL production was found in samples of inpatients. Conclusion: The present study showed high prevalence of ESBL-producing Enterobacteriaceae especially in the patients admitted to hospital. Infection control strategy with continuous resistance surveillance is essential to monitor in vitro susceptibility to antibacterial agents currently used in clinical practice. Determination of the type of involved ESBL enzymes is important for a better antimicrobial control and empirical therapy of critically ill patients in hospitals.