OBJECTIVE: Risk prediction models for community-acquired pneumonia (CAP) in hospitalised children are limited, especially in upper-middle-income countries. We developed a PaEdiatric Pneumonia Severity (PEPS) score to aid early risk stratification and examined its discriminatory ability. DESIGN: Prospective cohort study. SETTINGS AND PATIENTS: Between April 2022 and April 2023, children aged 1 month to <12 years hospitalised with radiographic-confirmed CAP were enrolled in Sabah, Malaysia. MAIN OUTCOME MEASURES: Key clinical factors were collected to develop risk profiles for mild, moderate, and severe CAP. The PEPS score was derived from the final multivariable model and its ability to discriminate CAP severity assessed. RESULTS: Among 868 children, 639 (73.6%) had mild, 83 (9.6%) moderate, and 146 (16.8%) severe CAP. Independent factors associated with moderate/severe CAP were age <6 months (adjusted OR (ORadj)=6.81, 95% CI 4.65 to 9.98), partial/unvaccinated status (ORadj=2.66, 95% CI 1.47 to 4.81), vomiting/refusal of feeds (ORadj=1.77, 95% CI 1.19 to 2.61), hypoxaemia (oxygen saturation 90-93% (ORadj=2.38, 95% CI 1.22 to 4.64); <90% (ORadj=28.88, 95% CI 13.37 to 62.35)) and anaemia (ORadj=1.76, 95% CI 1.17 to 2.67). The model demonstrated excellent discrimination in identifying risk of children having moderate/severe CAP (c-statistic=0.81, 95% CI 0.78 to 0.84). The developed PEPS score (0-13) stratified children into low-risk (score 0-1), moderate-risk (score 2-4) and high-risk (score ≥5) groups with observed rates of moderate/severe CAP 10.9%, 29.1%, and 76.9%, respectively, and demonstrated strong predictive performance for moderate/severe CAP (c-statistic=0.81, 95% CI 0.77 to 0.84). CONCLUSION: The PEPS score, the first developed in an upper-middle-income country using radiographic-confirmed CAP, accurately discriminates mild from moderate/severe hospitalised CAP. It may support case management in similar settings, but requires external validation before broader implementation.