The initial management of patients suspected of having community-acquired pneumonia is challenging because of the broad range of clinical presentations, potential life-threatening nature of the illness, and associated high costs of care. The initial testing strategies should accurately establish a diagnosis and prognosis in order to determine the optimal treatment strategy. The diagnosis is important in determining the need for antibiotic therapy, and the prognosis is important in determining the site of care. This paper reviews the test characteristics of the history, physical examination, and laboratory findings, individually and in combination, in diagnosing community-acquired pneumonia and predicting short-term risk for death from the infection. In addition, we consider the implications of these test characteristics from the perspective of decision thresholds. The history and physical examination cannot provide a high level of certainty in the diagnosis of community-acquired pneumonia, but the absence of vital sign abnormalities substantially reduces the probability of the infection. Chest radiography is considered the gold standard for pneumonia diagnosis; however, we do not know its sensitivity and specificity, and we have limited data on the costs of false-positive and false-negative results. In the absence of empirical evidence, the decision to order a chest radiograph needs to rely on expert opinion in seeking strategies to optimize the balance between harms and benefits. Once community-acquired pneumonia is diagnosed, a combination of history, physical examination, and laboratory items can help estimate the short-term risk for death and, along with the patient's psychosocial characteristics, determine the appropriate site of treatment.