The aim was to estimate the community incidence and risk factors for all-cause pneumonia in children in Western Sydney, Australia. A cross-sectional randomized computer-assisted telephone interview was conducted in July 2000, in Western Sydney. Parents of 2020 children aged between 5 and 14 years were interviewed about their child's respiratory health since birth. No verification of reported diagnosis was available. Logistic regression analysis was used to determine risk factors for pneumonia. A lifetime diagnosis of pneumonia was reported in 137/2020 (6·8%) children, giving an estimated incidence in the study sample of 7·6/1000 person-years. Radiological confirmation was reported in 85% (117/137). Hospitalization was reported in 41% (56/137) and antibiotic therapy in 93% (127/137) of cases. Using logistic regression modelling, statistically significant associations with pneumonia were a reported history of either asthma, bronchitis or other lung problems and health problems affecting other systems. In most cases, the diagnosis of asthma preceded the diagnosis of pneumonia. The community incidence of all causes of pneumonia is not well enumerated, either in adults or in children. This study provides community-based incidence data. The incidence of hospitalization for pneumonia in this study is comparable to estimates from studies in comparable populations, suggesting that retrospective parental report for memorable events is likely to be valid. We found a relationship between pneumonia and childhood respiratory diseases such as asthma, which has implications for targeted vaccination strategies.