A number of important developments concerning childhood pneumonia and empyema have received recent attention in the literature. Drug-resistant strains of the most common bacterial pathogen for childhood pneumonia, Streptococcus pneumoniae, have emerged in diverse geographic regions within the United States. Studies regarding the epidemiology, diagnosis, and treatment of these penicillin-resistant S. pneumoniae strains have now been published. Promising new diagnostic methods for detecting difficult to culture pathogens in sputum using polymerase chain reaction technology are now available and undergoing critical evaluation in clinical use. The debate on how to best manage empyema continues, and the role of fibrinolytic therapy and thoracoscopy as a possible alternative to traditional thoracotomy and decortication are reviewed.