Nosocomial pneumonia continues to represent a significant cause of morbidity and mortality in hospitalized patients. Bacteria are responsible for greater than 90% of the pneumonias, the most common isolates being aerobic Gram-negative bacilli and S. aureus. Cornerstones of treatment are intravenous antibiotics and supportive care. In the individual case the true etiology is usually unknown; therefore empiric broad spectrum treatment is commonly used based on the prevalence of local pathogens, their antibiotic sensitivity pattern and on host factors. Combination antibiotic regimens, including beta-lactams and aminoglycosides, are considered as standard therapy and are associated with clinical success rates of greater than 80%. Monotherapy with broad spectrum antibiotics, such as third generation cephalosporins, imipenem and fluoroquinolones, can be considered as equally effective in non-neutropenic patients and in the absence of P. aeruginosa infection. More active and less toxic antibiotics are still needed for problematic pathogens such as methicillin-resistant S. aureus strains, multiresistant Enterobacteriaceae and Pseudomonas species. Because further improvement in morbidity and mortality may be limited with antibiotics alone, new emphasis should be placed on prevention of infection and the use of immunotherapy.