Objective The objective of this study was to determine the diagnostic validity of digital chest auscultation to improve the differentiation of chest sounds associated with pneumonia in children. Methods This is a prospective case–control study at two hospitals in Nepal. Cases had World Health Organization-defined pneumonia and were classified as radiologically confirmed or nonconfirmed based on radiographic findings. Controls had no respiratory complaints. The presence of crepitations in recorded lung sounds defined pneumonia. Radiologically confirmed pneumonia was the reference standard. Results Sensitivity and specificity of digital auscultation were 56% (95% confidence interval [CI], 40–70%) and 73% (95% CI, 70–76%), respectively. Conclusion Digital auscultation in conjunction with standardized grading of digital lung sounds has the potential to improve the specificity of pneumonia diagnosis, but further development of objective interpretation of lung sounds is needed.