Introduction:Identifying whether the pleural effusion is exudative or transudative is the first step in making a diagnosis.Lights criteria, have been accepted more widely than any other criteria for discriminating between transudative and exudative effusions.But incorrectly labels 15–20% of transudative effusions as exudates. We investigate if comparable results may be obtained using pleural fluid cholesterol and pleural fluid total protein. Objectives:To compare combined pleural fluid cholesterol and pleural fluid total protein with Light’s criteria in differentiating exudative and transudative effusion and find its significance. Methods:This is a hospital based cross sectional study conducted in the Department of Respiratory medicine, GMC, Kannur over a period of one year on 120 patients who presented with pleural effusion,and fulfilling the inclusion and exclusion criteria. The pleural fluid sample obtained from each patient was taken for analysis,and nature of effusion by using Light’s criteria and combined pleural fluid cholesterol+total protein was noted. The final diagnosis based on clinical diagnosis along with HPR and/or culture was set as the gold standard. Mc Nemar’s Chi-square test was applied to compare Light’s criteria and Pleural fluid cholesterol+total protein with gold standard.The diagnostic parameters like sensitivity, specificity, PVP, PVN and accuracy of Light’s criteria and pleural fluid cholesterol+ total protein to predict exudates were estimated. Results: We found out that there is significant difference in the classification of transudate and exudate by Light’s criteria with respect to gold standard (p-value 0.001). Kappa value 0.722 shows a significant substantial agreement between Light’s criteria and gold standard test (p-value <0.001). The sensitivity ,specificity, PVP,PVN and accuracy of Light’s criteria to predict exudate was 100.00%,63.33%, 89.11%,100.00%, and 90.83% respectively. Also, there is significant difference in the classification of transudate and exudate by Pleural fluid cholesterol+total protein with respect to gold standard (p-value 0.031). Kappa value 0.875 shows a significantly almost perfect agreement between pleural fluid Cholesterol+Total protein and gold standard test (p-value <0.001).The sensitivity, specificity, PVP,PVN and accuracy of Pleural fluid Cholesterol+Total protein to predict exudate was 93.33%, 100.00%, 100.00%,83.33%, and 95.00% respectively. Conclusion: As compared to Light’s criteria, Pleural fluid cholesterol+total protein shows a high agreement with gold standard to distinguish exudative and transudative effusion and can be used as an alternative to Light’s criteria.