In a prospective controlled evaluation of steam therapy, in severe acute lower respiratory tract infection (ALRI) requiring hospitalization, 16 cases of bronchiolitis and 20 cases of pneumonia were assigned alternately to receive steam therapy in a cloth tent (Study Group); others served as controls. Respiratory status was assessed at the time of admission and subsequently at 6 hourly interval for 48 hours. No advantage of steam therapy could be identified in children with pneumonia. Bronchiolitis patients on steam therapy, as compared to the controls, showed a significant decrease in respiratory distress within first 24 hours after hospitalization and took significantly shorter time for recovery from the distress. The study patients also showed a tendency for rapid improvement in hypoxemia. Further critically controlled studies with a larger sample size are warranted.