Community-acquired pneumonia is both a common and a serious infection in the elderly population. The hospitalization and discharge decisions are among the most important management decisions physicians must make in caring for patients with this illness. Both of these decisions are important from a clinical, health services, and patient-oriented perspective. The hospitalization decision can be guided by a clinical algorithm that explicitly addresses five questions: (1) Does the patient have any life-threatening problems that require immediate stabilization (and de facto hospitalization)? (2) Does the patient have any prognostic factor(s) that increase the short-term risk of mortality? (3) Does the patient have any prognostic factor(s) that increase the short-term risk of morbidity or medical complications? (4) Does the patient have adequate functional skills or social support to allow care outside of the hospital? and (5) Does the patient require admission for a therapeutic modality or diagnostic evaluation? An affirmative response to any one of these questions indicates a need for hospitalization, whereas a negative response to all of the questions identifies potential candidates for outpatient care. The factors considered important in the hospitalization decision are also intimately related to the discharge decision. Before discharge, all acute physiological derangements should be corrected and laboratory abnormalities should be normalized or returning to baseline. All patients must be able to function socially outside of the hospital. Finally, treatment with an adequate course of antimicrobial therapy either must be completed or arranged on an ambulatory basis before discharge.