Community-acquired pneumonia remains a serious cause of morbidity and mortality, particularly in the elderly or patients with coexisting diseases. Therapeutic strategies are usually empiric, based upon demographic and epidemiologic factors, acuity and severity of illness, comorbidities, and cost constraints. Recent guidelines may be used to discriminate patients who may be treated in the outpatient setting with oral antimicrobials from patients in whom hospitalization and parenteral therapy is appropriate. Over the past decade, dramatic escalation in antimicrobial resistance among common respiratory pathogens poses obstacles to antibiotic choices. We review the microbiology of community-acquired pneumonia, and the therapeutic strategies that are clinically and cost effective.