BACKGROUND: Pneumococcal disease contributes significantly to childhood morbidity and mortality and treatment is costly. Nigeria recently introduced the pneumococcal conjugate vaccine (PCV) to prevent pneumococcal disease. The aim of this study is to estimate health provider and household costs for the treatment of pneumococcal disease in children aged <5 years (U5s), and to assess the impact of these costs on household income. METHODS: We recruited U5s with clinical pneumonia, pneumococcal meningitis or pneumococcal septicaemia from a tertiary level hospital and a secondary level hospital in Kano, Nigeria. We obtained resource utilisation data from medical records to estimate costs of treatment to provider, and household expenses and income loss data from caregiver interviews to estimate costs of treatment to households. We defined catastrophic health expenditure (CHE) as household costs exceeding 25% of monthly household income and estimated the proportion of households that experienced it. We compared CHE across tertiles of household income (from the poorest to least poor). RESULTS: Of 480 participants recruited, 244 had outpatient pneumonia, and 236 were hospitalised with pneumonia (117), septicaemia (66) and meningitis (53). Median (IQR) provider costs were US$17 (US$14-22) for outpatients and US$272 (US$271-360) for inpatients. Median household cost was US$51 (US$40-69). Overall, 33% of households experienced CHE, while 53% and 4% of the poorest and least poor households, experienced CHE, respectively. The odds of CHE increased with admission at the secondary hospital, a diagnosis of meningitis or septicaemia, higher provider costs and caregiver having a non-salaried job. CONCLUSION: Provider costs are substantial, and households incur treatment expenses that considerably impact on their income and this is particularly so for the poorest households. Sustaining the PCV programme and ensuring high and equitable coverage to lower disease burden will reduce the economic burden of pneumococcal disease to the healthcare provider and households.