We studied 80 children with parapneumonic effusion (PPE) with respect to the clinical manifestations and treatment alternatives as well as prospective follow-up for 1 year. Out of the 80 patients, 59 per cent were male. The mean age of the patients was 4.0 +/- 3.1 years. Mild effusion was successfully treated by antibiotic alone in 33 per cent of the patients. Tube thoracostomy (TT) was utilized in 63 per cent of the patients. In this group, 11 healed completely, 13 patients required surgical treatment, and 25 required fibrinolytic therapy (FT). FT was successful in 18, and no complication due to FT was observed. Six patients who received FT required surgical therapy later in the course of treatment. Cluster analysis revealed a group of patients with rapid progression and a short history of symptoms (4-6 days) that showed significantly higher rate of complicated prognosis (p<0.05). Successful FT prevented surgical operation in 22 per cent of the patients who were candidates for surgical treatment. The follow-up for one year revealed sequelae on chest X-ray in 28 per cent of the patients most of whom had an operation for necrotizing pneumonia. Pulmonary function tests performed over seven years of age were abnormal in 57 per cent of the patients.