Currently there is no consistent definition of congenital pneumonia. The actual incidence of this condition is unknown. Autopsy studies on preterm infants suggest that this condition is grossly under-diagnosed and a common cause of death. Bacteria, virus and fungi have been reported to be the causative organisms, with Staphylococcus epidermidis, Group B Streptococcus, Escherichia coli and Ureaplasma urealyticum being the most common. Examination of the gastric aspirate or nasopharyngeal aspirates shortly after birth, or tracheal aspirates obtained within 8 h of birth, may identify the causative organisms. Except for Gram staining and routine microbiological culture, most of the diagnostic tests are expensive. This review presents the diagnostic problems, treatment, prevention and future perspective of this condition.