Objectives: The aim of this study was to identify and measure the risk factors differentiating upper respiratory infection from pneumonia. Methods: The World Health Organization's acute respiratory infection case management criteria were used. We studied 259 cases of pneumonia (cases) and 187 cases of 'cough and cold' (controls) among children under 5 years of age at a large tertiary-care hospital in Gilgit, Pakistan. While previous studies used healthy controls, in this study we used controls who had mild infection ('cough and cold'). Results: In the multivariate logistic regression analysis, lack of immunization (adjusted odds ratio (AOR)=1.54, 95% CI 1.0, 2.3), previous history of pneumonia (AOR=1.77, 95% CI 1.16, 2.7), younger age (AOR for each preceding month in children aged up to 59 months=1.01, 95% CI 0.99, 1.03) and malnutrition (wasting) (AOR=2.2, 95% CI 1.0, 5.23) were revealed as important risk factors for pneumonia. Conclusions: Some of the factors reported in previous studies that used healthy controls were not found to be significant when 'cough and cold' children were used as controls. Nonetheless, malnutrition, younger age, low coverage of immunization and also early childhood mismanagement and respiratory damage were found to be significant factors for development of pneumonia.