Community-acquired pneumonia represents a high financial burden to healthcare providers. This manuscript seeks to estimate and compare the costs of treating children hospitalised with community-acquired pneumonia, with oral and intravenous antibiotics, thus determining which treatment is cost minimising. A cost-minimisation analysis was undertaken alongside a randomised controlled non-blinded equivalence trial. 232 children (from eight paediatric centres in England) diagnosed with pneumonia, who required admission to hospital, were randomised to receive oral amoxicillin or i.v. benzyl penicillin. The analysis considered the cost to the health service, patients and society, from pre-admission until the child was fully recovered. Oral amoxicillin and i.v. benzyl penicillin have equivalent efficacy. Children treated with i.v. antibiotics were found to have significantly longer in-patient stays (3.12 versus 1.93 days; p<0.001). i.v. treatment was found to be more expensive than oral treatment ( pound1,256 versus pound769; difference pound488; 95% CI: pound233- pound750), such that treatment of community-acquired pneumonia with oral amoxicillin would result in savings of between pound473 and pound518 per child (euro545 and euro596 per child) admitted. The findings demonstrate that oral amoxicillin is a cost-effective treatment for the majority of children admitted to hospital with pneumonia.