There is little UK data on hospital admission rates for childhood pneumonia, lobar pneumonia, severity or risk factors. From 13 hospitals serving the catchment population, demographic and clinical details were prospectively collected between 2001 and 2002 for children aged 0–15 years, seen by a paediatrician with community-acquired pneumonia (CAP) and consistent chest X-ray changes. From 750 children assessed in hospital, incidence of CAP was 14·4 (95% CI 13·4–15·4)/10000 children per year and 33·8 (95% CI 31·1–36·7) for <5-year-olds; with an incidence for admission to hospital of 12·2 (95% CI 11·3–13·2) and 28·7 (95% CI 26·2–31·4) respectively. Where ascertainment was confirmed, incidence of CAP assessed in hospital was 16·1 (95% CI 14·9–17·3) and 41·0 (95% CI 37·7–44·5) in the 0–4 years age group, whilst incidence for hospital admission was 13·5 (95% CI 12·4–14·6) and 32 (95% CI 29·1–35·1) respectively. In the <5 years age group incidence of lobar pneumonia was 5·6 (95% CI 4·5–6·8)/10000 per year and severe disease 19·4 (95% CI 17·4–21·7)/10000 per year. Risk of severe CAP was significantly increased for those aged <5 years (OR 1·50, 95% CI 1·07–2·11) and with prematurity, OR 4·02 (95% CI 1·16–13·85). It also varied significantly by county of residence. This is a unique insight into the burden of hospital assessments and admissions caused by childhood pneumonia in the United Kingdom and will help inform future preventative strategies.