Background: Community-acquired pneumonia (CAP) remains one of the leading causes of morbidity and mortality in children worldwide. Hyponatremia is a common electrolyte disturbance observed in children hospitalized with community-acquired pneumonia (CAP). This study aimed to assess the prevalence, severity, and clinical significance of hyponatremia in pediatric CAP patients and its association with disease outcomes. Material and Methods: This prospective observational study was conducted in a tertiary care children’s hospital and included 80 pediatric patients aged 1 month to 12 years, diagnosed with CAP. Patients with chronic illnesses affecting sodium balance were excluded. Serum sodium levels were measured at admission, and hyponatremia was classified as mild (130–134 mEq/L), moderate (125–129 mEq/L), or severe (<125 mEq/L). Demographic, clinical, and laboratory data were collected, including inflammatory markers and the need for oxygen therapy, ICU admission, hospital stay duration, and outcomes. Results: Hyponatremia was present in 67 (83.8%) of the 80 patients, with mild hyponatremia in 35 (43.8%), moderate in 22 (27.5%), and severe in 10 (12.5%) cases. Hyponatremic patients had significantly higher rates of oxygen therapy (56.7% vs. 23.1%, p=0.02) and ICU admissions (22.4% vs. 7.7%, p=0.04) compared to normonatremic patients. The mean hospital stay was longer in hyponatremic patients (6.3 ± 2.1 days vs. 4.1 ± 1.2 days, p<0.01). Elevated inflammatory markers, including C-reactive protein, were significantly associated with hyponatremia (24.8 ± 6.3 mg/L vs. 12.5 ± 4.8 mg/L, p<0.01). Severe hyponatremia was associated with neurological symptoms (70.0%), and hypertonic saline therapy was required in 80.0% of these cases. Conclusion: Hyponatremia is highly prevalent in pediatric CAP and is significantly associated with increased disease severity, prolonged hospitalization, and elevated inflammatory markers. Early recognition and appropriate management of hyponatremia are essential in improving clinical outcomes. Routine monitoring of sodium levels should be considered in hospitalized CAP patients to guide treatment strategies effectively.