OBJECTIVES: To investigate the association between antipsychotic drug use and risk of pneumonia in elderly people. DESIGN: A nested case-control analysis. SETTING: Data were used from the PHARMO database, which collates information from community pharmacies and hospital discharge records. PARTICIPANTS: A cohort of 22,944 elderly people with at least one antipsychotic prescription; 543 cases of hospital admission for pneumonia were identified. Cases were compared with four randomly selected controls matched on index date. MEASUREMENTS: Antipsychotic drug use in the year before the index date was classified as current, recent, or past use. No prescription for an antipsychotic in the year before the index date was classified as no use. The strength of the association between use of antipsychotics and the development of pneumonia was estimated using multivariate logistic regression analysis and expressed as odds ratios (ORs) with 95% confidence intervals (CIs). RESULTS: Current use of antipsychotics was associated with an almost 60% increase in the risk of pneumonia (adjusted OR=1.6, 95% CI=1.3-2.1). The risk was highest during the first week after initiation of an antipsychotic (adjusted OR=4.5, 95% CI=2.8-7.3). Similar associations were found after exclusion of elderly people with a diagnosis of delirium. Current users of atypical agents showed a higher risk of pneumonia (adjusted OR=3.1, 95% CI=1.9-5.1) than users of conventional agents (adjusted OR=1.5, 95% CI=1.2-1.9). There was no clear dose-response relationship. CONCLUSION: Use of antipsychotics in elderly people is associated with greater risk of pneumonia. This risk is highest shortly after the initiation of treatment, with the greatest increase in risk found for atypical antipsychotics.