Pneumonia is the leading cause of post-neonatal death amongst children under five years of age; however, there is no simple triage tool to identify children at risk of progressing to severe and fatal disease. Such a tool could assist for early referral and prioritization of care to improve outcomes and enhance allocation of scarce resources. We compared the performance of inflammatory and endothelial activation markers in addition to clinical signs or scoring scales to risk-stratify children hospitalized with pneumonia at the national referral hospital of Bhutan with the goal of predicting clinical outcome. Of 118 children, 31 evolved to a poor prognosis, defined as either mortality, admission in the paediatric intensive care unit, requirement of chest drainage or requirement of more than five days of oxygen therapy. Soluble triggering receptor expressed on myeloid cells 1 (sTREM-1) was the best performing biomarker and performed better than clinical parameters. sTREM-1 levels upon admission had good predictive accuracy to identify children with pneumonia at risk of poor prognosis. Our findings confirm that immune and endothelial activation markers could be proactively used at first encounter as risk-stratification and clinical decision-making tools in children with pneumonia; however, further external validation is needed.