A previously neurodevelopmentally intact 5-year-old male was admitted to hospital with a right lower lobe pneumonia with pleural effusion, subsequently confirmed to be a Mycoplasma pneumoniae infection. On the seventh day of the illness he had a prolonged generalized tonic or tonic-clonic convulsion, requiring intubation and ventilation. He was slow to regain consciousness (Child's Glasgow Coma Score 7-10 over 6 days) and brain imaging with CT and then MRI demonstrated bilateral thalamic lesions with oedema and central haemorrhage suggestive of acute bilateral thalamic necrosis, without striatal or white-matter involvement. He was treated with a 2-week course of erythromycin, and as an autoimmune process was considered possible, 5 days of intravenous methylprednisolone (20 mg/kg/day) followed by a 4-week oral prednisolone taper. He made a slow recovery over the next few weeks with almost complete neurological recovery by 2 months but with significant dysarthria, drooling, and a mild left hemiparesis. At 9 months, significant dystonia continued to affect his speech and, together with tremor, his upper-limb fine motor function bilaterally. His gait, personality, and higher cognitive functions appeared to have recovered fully. Although acute striatal necrosis, acute disseminated encephalomyelitis, and encephalitis have been reported with Mycoplasma pneumoniae and a similar picture of acute bilateral thalamic necrosis with influenza-A ('acute necrotizing encephalopathy'), this is the first reported case of Mycoplasma pneumoniae-associated isolated acute bilateral thalamic necrosis.