To determine the incidence, outcome, and optimal management of empyema, all children less than 15 years of age admitted to Khao-I-Dang Hospital with a diagnosis of empyema during a 23-month period were prospectively studied. Khao-I-Dang Hospital provides care to 137,000 Cambodian children residing in eight refugee camps along the Thai-Cambodian border. Ninety-eight children with empyema were identified, for an annual incidence of 0.37 cases per 1,000 children. All patients had chest tubes inserted on admission, and all were treated with parenteral antibiotics, which included chloramphenicol in 92% of the patients and cloxacillin in 72%. Patients were hospitalized a mean of 30 days, and chest tubes were in place for a mean of 12 days. Surgery was performed on four patients who had bronchopleural fistulas that persisted for more than 14 days. Only one (1%) of the 70 patients treated with cloxacillin required thoracotomy, compared with three (11%) of the 28 patients who did not receive cloxacillin (P = 0.07). In a multiple regression analysis, the presence of pneumatoceles or mediastinal shift on admission chest radiograph, a history of tuberculosis in the family, and an age of more than five years were predictive of a longer duration of chest tube drainage. No patient died in the hospital, and only one patient died in the six months following discharge from the hospital. Chest radiographs that were obtained six months after discharge in 25 patients were all essentially normal, despite marked abnormalities on chest radiographs obtained at discharge. In summary, conservative medical management with the use of chest tubes for these 98 children with empyema resulted in a mortality rate of 1.0%, and should be considered as an effective alternative to the surgical management of patients presenting with this complication.