Objective: To evaluate the effectiveness of the 7-valent pneumococcal conjugate vaccine (PCV7) in preventing pneumonia, diagnosed radiologically according to World Health Organization (WHO) criteria, among indigenous infants in the Northern Territory of Australia. Methods: We conducted a historical cohort study of consecutive indigenous birth cohorts between 1 April 1998 and 28 February 2005. Children were followed up to 18 months of age. The PCV7 programme commenced on 1 June 2001. All chest X-rays taken within 3 days of any hospitalization were assessed. The primary endpoint was a first episode of WHO-defined pneumonia requiring hospitalization. Cox proportional hazards models were used to compare disease incidence. Findings: There were 526 pneumonia events among 10 600 children - an incidence of 3.3 per 1000 child-months; 183 episodes (34.8%) occurred before 5 months of age and 247 (47.0%) by 7 months. Of the children studied, 27% had received 3 doses of vaccine by 7 months of age. Hazard ratios for endpoint pneumonia were 1.01 for 1 versus 0 doses; 1.03 for 2 versus 0 doses; and 0.84 for 3 versus 0 doses. Conclusion: There was limited evidence that PCV7 reduced the incidence of radiologically confirmed pneumonia among Northern Territory indigenous infants, although there was a non-significant trend towards an effect after receipt of the third dose. These findings might be explained by lack of timely vaccination and/or occurrence of disease at an early age. Additionally, the relative contribution of vaccine-type pneumococcus to severe pneumonia in a setting where multiple other pathogens are prevalent may differ with respect to other settings where vaccine efficacy has been clearly established.