OBJECTIVE: To assess the effect of ventilator-associated pneumonia on resource utilization, morbidity, and mortality. DESIGN: Retrospective matched cohort study based on prospectively collected data. SETTING: Medical intensive care unit of a university teaching hospital. PATIENTS: Case-patients were all patients receiving mechanical ventilation for 48 hours or more who experienced an episode of ventilator-associated pneumonia. Control-patients were matched for number of discharge diagnoses, duration of mechanical support before the onset of pneumonia among case-patients, age, admission diagnosis, gender, and study period. RESULTS: One hundred six cases of ventilator-associated pneumonia were identified in 452 patients receiving mechanical ventilation. The matching procedure selected 97 pairs. Length of stay in the intensive care unit and duration of mechanical ventilation were greater among case-patients by a mean of 7.2 days (P< .001) and 5.1 days (P< .001), respectively. Median costs were $24,727 (interquartile range, $18,348 to $39,703) among case-patients and $17,438 (interquartile range, $12,261 to $24,226) among control-patients (P < .001). The attributable mortality rate was 7.3% (P = .26). The attributable extra hospital stay was 10 days with an extra cost of $15,986 per episode of pneumonia. CONCLUSION: Ventilator-associated pneumonia negatively affects patient outcome and represents a significant burden on intensive care unit and hospital resources.