The aim of the study was to determine the incidence of and risk factors for drug resistance of Streptococcus pneumoniae, and its impact on the outcome among hospitalized patients of pneumococcal pneumonia acquired in the community. Consecutive patients with culture-proven pneumococcal pneumonia were prospectively studied with regard to the incidence of pneumococcal drug resistance, potential risk factors, and in-hospital outcome variables. A total of 101 patients were studied. Drug resistance to penicillin, cephalosporin, or a macrolide drug was found in pneumococci from 52 of the 101 (52%) patients; 49% of these isolates were resistant to penicillin (16% intermediate resistance, 33% high resistance), 31% to cephalosporin (22% intermediate and 9% high resistance), and 27% to a macrolide drug. In immunocompetent patients, age > 65 yr was significantly associated with resistance to cephalosporin (odds ratio [OR]: 5.0; 95% confidence interval [CI]: 1.3 to 18.8, p = 0. 01), and with the presence of > 2 comorbidities with resistance to penicillin (OR: 4.7; 95% CI: 1.2 to 19.1; p < 0.05). In immunosuppressed patients, bacteremia was inversely associated with resistance to penicillin and cephalosporin (OR: 0.04; 95% CI: 0.003 to 0.45; p < 0.005; and OR: 0.46; 95% CI: 0.23 to 0.93; p < 0.05, respectively). Length of hospital stay, severity of pneumonia, and complications were not significantly affected by drug resistance. Mortality was 15% in patients with any drug resistance, as compared with 6% in those without resistance. However, any drug resistance was not significantly associated with death (relative risk [RR]: 2. 5; 95% CI: 0.7 to 8.9; p = 0.14). Moreover, attributable mortality in the presence of discordant antimicrobial treatment was 12%, as compared with 10% (RR: 1.2; 95% CI: 0.3 to 5.3; p = 0.67) in the absence of such treatment. We conclude that the incidence of drug-resistant pneumococci was high. Risk factors for drug resistance included advanced age, comorbidity, and (inversely) bacteremia. Outcome was not significantly affected by drug resistance.