Introduction Empiric data on indirect (herd) effects of pneumococcal conjugate vaccines (PCVs) in settings with low or heterogeneous PCV coverage are limited. The indirect effects of PCV, which benefits both vaccinated and non-vaccinated individuals, are mediated by reductions in vaccine-type (VT) carriage (a prerequisite for disease). The aim of this study among hospitalised children in Lao People’s Democratic Republic (Lao PDR) is to determine the effectiveness of a 13-valent PCV (PCV13) against VT pneumococcal nasopharyngeal carriage (direct effects) and the association between village-level PCV13 coverage and VT carriage (indirect effects). Methods Pneumococcal nasopharyngeal carriage surveillance commenced in December 2013, shortly after PCV13 introduction (October 2013). We recruited and swabbed children aged 2–59 months admitted to hospital with acute respiratory infection. Pneumococci were detected using lytA quantitative real-time PCR and serotyped using microarray. PCV13 status and village-level PCV13 coverage were determined using written immunisation records. Associations between both PCV13 status and village-level PCV13 coverage and VT carriage were calculated using generalised estimating equations, controlling for potential confounders. Results We enrolled 1423 participants and determined PCV13 coverage for 368 villages (269 863 children aged under 5 years). By 2017, median village-level vaccine coverage reached 37.5%, however, the IQR indicated wide variation among villages (24.1–56.4). Both receipt of PCV13 and the level of PCV13 coverage were independently associated with a reduced odds of VT carriage: adjusted PCV13 effectiveness was 38.1% (95% CI 4.1% to 60.0%; p=0.032); and for each per cent increase in PCV13 coverage, the estimated odds of VT carriage decreased by 1.1% (95% CI 0.0% to 2.2%; p=0.056). After adjustment, VT carriage decreased from 20.0% to 12.8% as PCV13 coverage increased from zero to 60% among under 5. Conclusions Despite marked heterogeneity in PCV13 coverage, we found evidence of indirect effects in Lao PDR. Individual vaccination with PCV13 was effective against VT carriage.