A prospective observational study, carried out in a tertiary care teaching hospital. Patients were followed from the day of diagnosis of HAP, till the day of discharge or death. Patient data like demography (age, sex), antimicrobial agent usage details (total number of antibiotics prescribed, generic name, dose, grams per unit dosage, No. of doses per package, No. of packages consumed, duration, and route of administration of the antibiotic), length of hospital stay and clinical outcome were recorded in a predesigned data collection form. The cost of antimicrobial therapy was recorded from the day of admission, till the day of discharge.310 patients were included in the study. Among study population 229 (73.9%) patients were male and mean age was 55.9±18.4 (mean±SD). Out of 310 patients 218 were improved and 55 were expired. Mean length of hospitalization was 9.45±6.75 (mean±SD) days. Total 25 antimicrobial agents or their combinations were used for the treatment of HAP in these patients. Among these antimicrobial agents, consumption (DDD/100 bed days) was highest for Piperacillin/tazobactam (parenteral, 0.12) followed by Ceftriaxone (parenteral, 0.10), Azithromycin (oral, 0.10) and Trimethoprim/sulphamethoxazole (oral, 0.08).Single antimicrobial agent used depending on the sensitivity of the infecting microorganism was the most effective (50%) and also cost-effective (Rs. 2333±1002). Among antimicrobial agent combinations the percentage of treatment success was highest for patients who were treated with Piperacillin/tazobactam+ Azithromycin combination (46%), followed by Cephalosporin+ Azithromycin combination (38%). However the cost of treatment was high for Piperacillin-tazobactam+Azithromycin regimen (Rs.9939±1033) compared to Cephalosporin+ Azithromycin combination (Rs. 5200±1832).