Abstract: Iron deficiency anemia is a major health problem in young children. It may be associated with increased risk of pneumonia. The present study is a prospective one conducted during the period from February, 2014 until February, 2015. The study included 300 children divided into two equal groups according to presence or absence of pneumonia. For each child, a detailed history, clinical examination, chest x-ray and laboratory investigations (complete blood count, Erythrocyte Sedimentation Rate (ESR), C-Reactive Protein (CRP), iron and serum ferritin) were performed. Compared to the control group, mothers of the study group lacked both high education and social class. However, there was a significant increase of ESR and WBCs in the study group compared to the control group and there was also a significant decrease of RBCs, hemoglobin, ferritin and iron in study group when compared to control group. Finally, there was a significant inverse (negative) correlation between iron from one side and each of ESR and WBCs from the other side. On the other hand, there was a positive (proportional) significant correlation between iron and both RBCs, ferritin and hemoglobin. Iron deficiency anemia was significantly associated with pneumonia in children. Thus, early and accurate diagnosis of iron deficiency in children is of utmost importance.