Pleural effusions are commonly associated with pneumonias and a small number of these progress to empyema. An understanding of the physiology and pathophysiology of pleural fluid aids the clinician in the management of empyema. There remains much debate about the optimal treatment of empyema in children. Early recognition of the condition is important since delayed therapy may result in unnecessary morbidity. Conventional management with high dose parenteral antibiotics and chest tube drainage remains the mainstay of therapy. However, this treatment modality may fail if the pleural fluid becomes viscous and loculated and, therefore, a more aggressive approach is required. Intrapleural fibrinolytic therapy has been shown to decrease the length of hospital stay and may reduce the need for surgical intervention. The prognosis in children with parapneumonic empyema is excellent with the vast majority retaining normal lung function at long term follow-up.