Background Detecting errors before medication dispensed or 'near misses' is a crucial step to combat the incidence of dispensing error. Despite this, no published evidence available in Malaysia relating to these issues. Objective To determine the incidence of medication labeling and filling errors, frequency of each type of the errors and frequency of the contributing factors at the final stage before dispensing. Setting Six Penang public funded hospitals outpatient pharmacies. Methods A prospective multicentre study, over 8 week's period. Pharmacists identified and recorded the details of either medication labeling and/or filling error at the final stage of counter-checking before dispensing. Besides, the contributing factors for each error were determined and recorded in data collection form. Descriptive analysis was used to explain the study data. Main outcome measure The incidence of near misses. Results A total of 187 errors (near misses) detected, with 59.4% (n = 111) were medication filling errors and 40.6% (n = 76) were labeling errors. Wrong drug (n = 44, 39.6%) was identified as the highest type of filling errors while incorrect dose (n = 34, 44.7%) was identified as the highest type of labeling errors. Distracted and interrupted work environment was reported to lead the highest labeling and filling errors, followed by lack of knowledge and skills for filling errors and high workload for labeling errors. Conclusion The occurrence of near misses related to medication filling and labelling errors is substantial at outpatient pharmacy in Penang public funded hospitals. Further research is warranted to evaluate the intervention strategies needed to reduce the near misses.