The physiology of pleural liquid formation and stages of pleural effusion are reviewed in this article in our recent experience, only 50% of pleural effusions in hospitalized patients were parapneumonic and only about 7% of these patients could be classified as having an empyema. These findings are in contrast to children 20 to 30 years ago in whom over 40% of parapneumonic effusions were empyemas. Diagnostic approaches are also controversial. The accuracy, sensitivity and specificity of various biochemical tests of pleural fluid have not been assessed in children. It seems reasonable to avoid thoracentesis if the clinician is certain of etiology of the pleural effusion from the history, physical examination, and supporting laboratory data. Treatment is also controversial. Indeed, most patients recover without tube thoracostomy. In our series, only 27% of patients were treated with tube drainage. It is suggested that drainage is necessary to relieve respiratory difficulty or pleuritic pain when effusions are relatively large. The need to drain all empyemas is also a controversial issue both in the child and adult. Clearly, what is needed is a carefully designed multicentered prospective study of pleural effusion in children.