Accurate clinical diagnosis of pneumonia, the leading cause of mortality in small ruminants, is difficult and usually requires postmortem examination of the lungs. An active abattoir survey was conducted between November 2017 and April 2018 to estimate the prevalence and characterize the gross and histopathological lesions of pneumonic lungs in 864 clinically healthy young small ruminants (490 sheep and 374 goats aged 1.5 to 3 years) raised for meat in different parts of the country and slaughtered at Elfora Bishoftu export abattoir, Ethiopia. Out of the total lungs examined grossly, pneumonic lesions were found in 158 (18.29%) lungs. On histopathological examination of the lungs with gross pneumonic lesion, however, typical pneumonic lesions were diagnosed in 148 (17.13%) lungs only. No significant (p>0.05) difference was noted in the prevalence of pneumonia between sheep (17.14%) and goats (17.11%) in histopathological examination. Based on the predominant histopathological findings, the pneumonic lesions were characterized as interstitial pneumonia (41.9%), acute suppurative bronchopneumonia (25.7%), acute fibrinous bronchopneumonia (24.3%), chronic bronchopneumonia (6.1%), aspiration pneumonia (4.7%), bronchointerstitial pneumonia (3.4%), and ovine pulmonary adenomatosis (3.4%). The study further showed the spread of ovine pulmonary adenomatosis and ovine progressive pneumonia (Maedi) from the central highlands to areas that were previously free from these diseases. Due to its better diagnostic capacity, histopathology should be employed routinely as an ancillary test in the major abattoirs and regional veterinary laboratories to generate additional epidemiological data for a better disease control and prevention measures. Further studies are also recommended to identify the etiological agents of pneumonia in sheep and goats and thereby to formulate feasible and cost-effective interventions.