Summary: Pneumonia accounts for nearly half of all admissions amongst children less than 5 years of age to health centres and hospitals in the highlands of Papua New Guinea.1 Until recently, the indications for the use of oxygen in the management of childhood pneumonia in Papua New Guinea had been confined to the detection of cyanosis and restlessness.2Oxygen is, however, difficult to deliver to many parts of Papua New Guinea, leading to high transport costs and shortages. Health workers in rural areas are continually faced with decisions as to which children should be given oxygen when it is in short supply. This study related clinical signs to the oxygen saturation of the blood using a pulse oximeter, in order to offer rational criteria for the use of oxygen in health centres and hospitals in remote areas. Data were collected on 110 children who were admitted to Tari Hospital with a diagnosis of moderate or severe pneumonia. Following admission, assessments were repeated at 12-hourly intervals until the child was discharged from the intensive nursing ward. All clinical assessments and oximetry readings were taken by a registered nurse.A rule developed via quadratic discrimination analysis was able to correctly classify 80 per cent of children as having adequate/inadequate oxygen saturation, with 'inadequate oxygen saturation' defined as less than 85 per cent. This, however, involved a complicated equation which would not be suitable for general use in a developing country. The use of a 'clinical score' using a summation of the major clinical signs was not found to offer any advantage over the recognition of any one of four 'indicator' signs. A simple rule based on the presence of cyanosis, grunting, a respiratory rate greater than 90 per minute or a reduced level of consciousness was, however, correctly able to classify 70 per cent of those with a low oxygen saturation as in need of oxygen. Degrees of indrawing, loss of feeding, crepitations and signs of heart failure showed less correlation.