OBJECTIVES: This study aimed to evaluate the economic burden of hospitalized pneumonia and its associated costs in the Brazilian Private Health System. METHODS: An administrative claims database containing over 18 million lives was used to identify hospitalized pneumonia episodes, in all ages, between Oct/2010 and Dec/2013.  Pneumonia episodes were identified using ICD-10 codes of A40.3, B95.3, G00.1, J13, J15, J15.0, J15.3, J15.4, J15.8, J15.9, J18, J18.0, J18.9, J20.2, P23.3. Pneumonia costs included were taxes and exchange, medicines, materials, medicinal gases, food, medical fees, exams, procedures and personal hygiene. The costs represent a total in the evaluated period for all causes and considering the total patients identified, average cost was calculated. RESULTS: A total of 16,227 pneumonia patients were identified with a total of 17,781 hospitalizations, representing an average of 1.1 hospitalizations per pneumonia patient in all ages. The aggregate costs for all inpatient treatment were BRL202,687,872.71 representing  a total of 130,406 hospital days across the pneumonia patients. The average days for hospitalization per patient is 7.5 days. The average expenditure for the health insurance provider represents BRL12,490.78 per patient or BRL11,399.13, when evaluating per hospitalization. This translates to an average daily expenditure of BRL1,704.06 per patient or BRL1,555.13 per hospitalization. CONCLUSIONS: Costs related to pneumonia hospitalization are high and represents a large impact to the total budget spends in the private healthcare system. Given the significant economic burden associated with pneumonia, there is a need to better implement prevention strategies such as flu and pneumococcal vaccinations and smoking cessation.