Aim: The incidence of childhood empyema has been increasing in some developed countries despite the introduction of pneumococcal vaccination. This study aimed to document the incidence, bacterial pathogens, and morbidity/mortality of parapneumonic effusion/empyema in New Zealand. Methods: A prospective study of 102 children <15 years of age requiring hospitalization with parapneumonic effusion/empyema between May 1, 2014 and May 31, 2016 notified via the New Zealand Paediatric Surveillance Unit. Parapneumonic effusion/empyema was defined as pneumonia and pleural effusion persisting ≥7 days, and/or any pneumonia, and pleural effusion necessitating drainage. Notifying pediatricians completed standardized questionnaires.Results: Annual pediatric parapneumonic effusion/empyema incidence was 5.6/ 100,000 (95% confidence interval [CI]: 4.7-6.9). Most children (80%) required surgical intervention and 31% required intensive care. A causative organism was identified in 71/102 (70%) cases. Although Staphylococcus aureus (25%) and Streptococcus pneumoniae (25%) infection rates were equal, prolonged hospitalization and intensive care admission were more common in children with S. aureus PPE/E . Māori and Pasifika children were over-represented at 2.2 and 3.5 times, their representation in the New Zealand pediatric population. Pneumococcal vaccination was incomplete, with only 61% fully immunized and 30% unimmunized. Haemophilus influenzae type b vaccine uptake was near complete at 89/94 (95%), with influenza immunization only 3/78 (4%).Conclusions: New Zealand has a high incidence of pediatric complicated parapneumonic effusion/empyema with significant morbidity. S. aureus was a significant cause of severe empyema in New Zealand, particularly for Māori and Pasifika children. Improvements in vaccine coverage are needed along with strategies to reduce S. aureus disease morbidity.