The goal of this study was to determine the accuracy and the impact of 5 different claims-based pneumonia definitions. Three International Classification of Diseases, Version 9, (ICD-9), and 2 diagnosis-related group (DRG)-based case identification algorithms were compared against an independent, clinical pneumonia reference standard. Among 10748 patients, 272 (2.5%) had pneumonia verified by the reference standard. The sensitivity of claims-based algorithms ranged from 47.8% to 66.2%. The positive predictive values ranged from 72.6% to 80.8%. Patient-related variables were not significantly different from the reference standard among the 3 ICD-9-based algorithms. DRG-based algorithms had significantly lower hospital admission rates (57% and 65% vs 73.2%), lower 30-day mortality (5.0% and 5.8% vs 10.7%), shorter length of stay (3.9 and 4.1 days vs 5.6 days), and lower costs (USD $4543 and USD $5159 vs USD $8585). Claims-based identification algorithms for defining pneumonia in administrative databases are imprecise. ICD-9-based algorithms did not influence patient variables in our population. Identifying pneumonia patients with DRG codes is significantly less precise.