Within Australia, Victoria is the only jurisdiction where the 23-valent polysaccharide pneumococcal vaccine (23vPPV) has been publicly funded for the elderly (aged > or = 65 years). We compared age-specific rates of invasive pneumococcal disease (IPD) for periods before and after implementation of the program, and data from a comparable Australian population that does not have a funded program. Vaccine effectiveness (VE) was estimated using the screening and indirect cohort methods. Compared to the pre-program period, there was a 36% reduction in the reported rates of IPD among persons aged > or = 65 years. Adjusted for under-reporting in the referent rate, the decrease was equivalent to an annual reduction of 112 cases and an estimated 14 deaths among persons > or = 65 years. VE was 71% (95% CI 54-82) using the screening method and 79% (95% CI -14 to 96) by the indirect cohort method. Both point estimates were consistent with the VE expected among persons aged > or = 65 years, although the small number of isolates meant the indirect cohort method was inconclusive at the lower 95% confidence limit. Consideration should be given to publicly funding pneumococcal vaccine for this age group in other settings.