Lung ultrasound is emerging as a rapid, simple and safe alternative for diagnosing pneumonia since it has a higher sensitivity than X-rays and lower radiation exposure than computerized tomography. This is a prospective observational study done at a tertiary care centre in Chennai to study the diagnostic utility of lung ultrasound in pneumonia. Children aged 1 month to 12 years who were admitted to the hospital with complaints of cough, fever and/or breathing difficulty and on examination had tachypnea and/or chest indrawing were included in the study. All children underwent chest X-rays which was a standard hospital protocol. At admission, an independent investigator who was blinded to the clinical and radiological features of the child performed lung ultrasound. In all children, the final diagnosis of pneumonia was made by another independent expert paediatrician on the basis of the clinical features and chest X-ray. The test characteristics of ultrasound and chest X-ray were compared against this gold standard of physician-diagnosed pneumonia. Out of the 252 children studied, 225 (89.3%) had pneumonia while the rest 27 (10.7%) had other diagnoses. Among the 225 children with pneumonia, 223 (99.1%) were detected by ultrasound while 157 (69.8%) were detected by chest X-ray. All the test characteristics such as sensitivity, specificity, positive and negative predictive values of ultrasound were higher than those of chest X-ray. The sensitivity and specificity of ultrasound to diagnose pneumonia were 99.11% and 81.48%, respectively, while the sensitivity and specificity of X-ray for the same were 69.77% and 74.07%, respectively. Overall diagnostic accuracy for chest ultrasonography was 97.22% (94.36% to 98.88%), whereas for chest radiography, it was found to be 70.24% (64.18% to 75.81%).While both modalities were able to diagnose pneumonia significantly, ultrasound had better strength of association (Cramer's V value = 0.849) than X-ray to the final diagnosis. Lung ultrasound can be employed as a point-of-care investigation to diagnose pneumonia in suspected cases and can even replace chest X-ray in such circumstances.