The level of income inequality (ie, the variation in median household income among households within a geographic area), in addition to family-level income, is associated with worsened health outcomes in children. OBJECTIVE To determine the influence of income inequality on pediatric hospitalization rates for ambulatory care-sensitive conditions (ACSCs) and whether income inequality affects use of resources per hospitalization for ACSCs. DESIGN, SETTING, AND PARTICIPANTS This retrospective, cross-sectional analysis used the 2014 State Inpatient Databases of the Healthcare Cost and Utilization Project of 14 states to evaluate all hospital discharges for patients aged 0 to 17 years (hereafter referred to as children) from January 1 through December 31, 2014. EXPOSURES Using the 2014 American Community Survey (US Census), income inequality (Gini index; range, 0 [perfect equality] to 1.00 [perfect inequality]), median household income, and total population of children aged 0 to 17 years for each zip code in the 14 states were measured. The Gini index for zip codes was divided into quartiles for low, low-middle, high-middle, and high income inequality. MAIN OUTCOMES AND MEASURES Rate, length of stay, and charges for pediatric hospitalizations for ACSCs. RESULTS A total of 79 275 hospitalizations for ACSCs occurred among the 21 737 661 children living in the 8375 zip codes in the 14 included states. After adjustment for median household income and state of residence, ACSC hospitalization rates per 10 000 children increased significantly as income inequality increased from low (27.2; 95% CI, 26.5-27.9) to low-middle (27.9; 95% CI, 27.4-28.5), high-middle (29.2; 95% CI, 28.6-29.7), and high (31.8; 95% CI, 31.2-32.3) categories (P < .001). A significant, clinically unimportant longer length of stay was found for high inequality (2.5 days; 95% CI, 2.4-2.5 days) compared with low inequality (2.4 days; 95% CI, 2.4-2.5 days; P < .001) zip codes and between charges ($765 difference among groups; P < .001). CONCLUSIONS AND RELEVANCE Children living in areas of high income inequality have higher rates of hospitalizations for ACSCs. Consideration of income inequality, in addition to income level, may provide a better understanding of the complex relationship between socioeconomic status and pediatric health outcomes for ACSCs. Efforts aimed at reducing rates of hospitalizations for ACSCs should consider focusing on areas with high income inequality.