Pneumonia is a leading cause of mortality and morbidity worldwide with radiographically confirmed pneumonia a key disease burden indicator. This is usually determined by a radiology panel which is assumed to be the best available standard; however, this assumption may introduce bias into pneumonia incidence estimates. To improve estimates of radiographic pneumonia incidence, we applied Bayesian latent class modelling (BLCM) to a large database of hospitalized patients with acute lower respiratory tract illness in Sa Kaeo and Nakhon Phanom provinces, Thailand from 2005 to 2010 with chest radiographs read by both a radiology panel and a clinician. We compared these estimates to those from conventional analysis. For children aged <5 years, estimated radiographically confirmed pneumonia incidence by BLCM was 2394/100 000 person-years (95% credible interval 2185–2574) vs. 1736/100 000 person-years (95% confidence interval 1706–1766) from conventional analysis. For persons aged ⩾5 years, estimated radiographically confirmed pneumonia incidence was similar between BLCM and conventional analysis (235 vs. 215/100 000 person-years). BLCM suggests the incidence of radiographically confirmed pneumonia in young children is substantially larger than estimated from the conventional approach using radiology panels as the reference standard.