OBJECTIVES To estimate the resource use and direct medical costs associated with inpatient treatment in children diagnosed with pneumococcal disease in a Brazilian public hospital and compare the average cost with the mean payments reimbursed by the Brazilian Public Health Care System. METHODS A retrospective cohort of 133 children under 5 years of age with pneumococcal disease was obtained from a Brazilian public hospital. Resource use data derived from medical records review. For the pneumococcal pneumonia patients, we calculated the mean length of stay and the costs per hospitalization were estimated using a standardized mean payment per day provided by the hospital (health provider perspective). We used the Tabwin software to tabulate data from the Hospitalization Information System regarding the reimbursement for pneumococcal pneumonia-related hospitalizations under 5 years of age in 2007. Secondary outcomes related to meningitis, acute otitis media and sepsis were analyzed. RESULTS The mean length of stay (LOS) in the pneumonia cohort was 13.5 days. Of 75 patients with pneumonia included in this study, 11 (14,7%) had been admitted in the ICU (mean LOS in ICU: 5.8 days; overall LOS of those patients: 19.5 days) and 64 (85,3%) had remained only in non-ICU units (mean LOS: 12.4 days). The average hospitalization cost per child under 5 years of age was BRL 6612 (US$ 4723; 2005 purchasing power parity index 1USD = 1.4BRL). The average reimbursement by the government to the hospital per pneumococcal pneumonia-related hospitalization was BRL 694 (US$495), approximately 10% of the hospital expenditure to treat the pneumonia patients. CONCLUSIONS We estimated a mean hospitalization cost with pneumococcal pneumonia in public hospitals 10 times higher than the official reimbursement. These results suggests that prevention strategies as vaccination may play an important role in reducing the burden of pneumonia on public hospitals and health care system.