Nosocomial pneumonia is a common hospital-acquired infection in children, and is often fatal. Risk factors for nosocomial pneumonia include admission to an intensive care unit, intubation, burns, surgery, and underlying chronic illness. Viruses, predominantly respiratory syncytial virus (RSV), are the most common cause of pediatric nosocomial respiratory tract infections. Gram-negative bacteria (Escherichia coli, Klebsiella pneumoniae, and Pseudomonas aeruginosa) are the predominant bacterial pathogens, and are associated with a high mortality rate. Staphylococcus aureus and Staphylococcus epidermidis are the most common Gram-positive bacteria causing nosocomial pneumonia; infections with these organisms have a better outcome than those with Gram-negative organisms. An increasing problem is the emergence of multiresistant Gram-positive and Gram-negative nosocomial pathogens. Distinguishing nosocomial pneumonia from other pulmonary processes may be difficult; diagnosis is based on clinical signs, radiological findings, and microbiological results. Recommended empiric therapy should consider factors such as the time of onset of illness, severity of disease, and specific risk factors for nosocomial pneumonia, including use of mechanical ventilation, underlying disease, or recent use of antibacterials. The resident local hospital flora should be considered when selecting therapy for nosocomial pneumonia. Early initiation of appropriate empiric therapy reduces morbidity and mortality. For empiric treatment of bacterial nosocomial pneumonia, an intravenous antibacterial regimen that includes coverage of Gram-negative bacilli and Gram-positive organisms should be used. A carbapenem or ureidopenicillin derivative (piperacillin) plus a beta-lactamase inhibitor should be used where extended spectrum beta-lactamase-producing Enterobacteriaceae are endemic. Therapy should be modified when a specific pathogen and its antimicrobial susceptibility are identified. Effective prevention of nosocomial pneumonia requires infection control measures that affect the environment, personnel, and patients. Of these, hand hygiene, appropriate infection control policies, and judicious use of antibacterials are essential.