SETTING: Tertiary hospital in Gaborone, Botswana. OBJECTIVE: To examine whether exposure to wood smoke worsens outcomes of childhood pneumonia. DESIGN: Prospective cohort study of children aged 1-23 months meeting clinical criteria for pneumonia. Household use of wood as a cooking fuel was assessed during a face-to-face questionnaire with care givers. We estimated crude and adjusted risk ratios (RRs) and 95% confidence intervals (CIs) for treatment failure at 48 h by household use of wood as a cooking fuel. We assessed for effect modification by age (1-5 vs. 6-23 months) and malnutrition (none vs. moderate vs. severe). RESULTS: The median age of the 284 enrolled children was 5.9 months; 17% had moderate or severe malnutrition. Ninety-nine (35%) children failed treatment at 48 h and 17 (6%) died. In multivariable analyses, household use of wood as a cooking fuel increased the risk of treatment failure at 48 h (RR 1.44, 95%CI 1.09-1.92, P = 0.01). This association differed by child nutritional status (P = 0.02), with a detrimental effect observed only among children with no or moderate malnutrition. CONCLUSIONS: Exposure to wood smoke worsens outcomes for childhood pneumonia. Efforts to prevent exposure to smoke from unprocessed fuels may improve pneumonia outcomes among children.