OBJECTIVES: The aim of this study was to estimate health and medical care costs for hospitalized pneumonia among children <2 years of age, pre- and post the introduction of Prevenar13 (PCV13) in Sweden. METHODS: The incidence of inpatient all-cause pneumonia (ICD-10 J12-J18) by County Council among children <2 years old between 1998 and 2013 was identified using the Swedish National Inpatient Register. The average incidence of pneumonia was calculated among County Councils that were utilizing PCV13 in two periods; the pre PCV period (during 1998-2006) and the post PCV 13 period (during 2011-2013). In a subsequent step, the average incidence per 100 000 by calendar period was multiplied with the expected costs of inpatient pneumonia (34 524 SEK, 3 712 €) RESULTS: The mean rates of all-cause pneumonia hospitalizations per 100,000 person years were higher in the pre-PCV13 era compared to after the introduction of PCV13 in Sweden (pre-PCV13; 596.4 and post-PCV13; 455.7 per 100,000 person years, respectively).  A difference of almost 5 million SEK (538 000€), in health and medical care costs per 100,000 person years was observed during the pre and post introduction of PCV13 among County Councils that were utilizing PCV13 between 2011 and 2013. CONCLUSIONS: Among children < 2 years old, all-cause pneumonia hospitalizations were reduced after introduction of PCV13 vaccination in Sweden. A reduction in the incidence of pneumonia also reduced the health and medical care costs.