We compared the socio-demographic and clinical outcomes as predictors in severely ill hospitalized under-five diarrheal children with and without pneumonia. We studied 496 under-five children with diarrhea admitted to the Special Care Ward (SCW) of Dhaka Hospital of International Center for Diarrheal Disease Research, Bangladesh from 1999 to 2004. Children with pneumonia, in addition to their diarrhea, constituted the study group (cases), and those who did not have pneumonia constituted the comparison (control) group. The individual predictors of pneumonia in children were a history of cough (OR 2.19, 95% CI 1.30-3.72, p=0.002), fever (OR 1.73, 95% CI 1.19-2.53, p=0.003), and rapid breathing (OR 2.45, 95% CI 1.49-4.03, p<0.001). Hypothermia (6% vs 2%; p=0.02), hyponatremia (41% vs 27%; p=0.003) and dehydrating diarrhea (81% vs 69%, p=0.003) were more frequent in control children. On logistic regression analyses, the case fatality among children with pneumonia was nearly two times (OR, 1.88 CI, 1.12-3.15, p= 0.02) than that of controls. Formulation of guidelines and implementation of a more comprehensive approach to managing pneumonia among severely ill diarrheal children is necessary to reduce childhood deaths in Bangladesh.