OBJECTIVE: The goal was to estimate the population effect of 7-valent pneumococcal conjugate vaccine on rates of acute otitis media-related ambulatory visits and antibiotic prescriptions for <2-year-old children enrolled in private insurance plans. METHODS: We performed a retrospective analysis of a defined population by using the 1997-2004 MarketScan databases, which included an average of >500,000 person-years of observations for children <2 years of age. Trends in rates of International Classification of Diseases, Ninth Revision-coded ambulatory visits and antibiotic prescriptions attributable to acute otitis media were evaluated, and the national direct medical expenditures for these outcomes were estimated. RESULTS: In a comparison of 2004 with 1997-1999 (baseline period), rates of ambulatory visits and antibiotic prescriptions attributable to acute otitis media decreased from 2173 to 1244 visits per 1000 person-years (42.7% reduction) and from 1244 to 722 prescriptions per 1000 person-years (41.9% reduction), respectively. Total, estimated, national direct medical expenditures for acute otitis media-related ambulatory visits and antibiotic prescriptions for children <2 years of age decreased from an average of $1.41 billion during 1997 to 1999 to $0.95 billion in 2004 (32.3% reduction). CONCLUSIONS: Acute otitis media-related health care utilization and associated antibiotic prescriptions for privately insured young children decreased more than expected (on the basis of efficacy estimates in prelicensure clinical trials) after the introduction of routine 7-valent pneumococcal conjugate vaccine immunization. Although other factors, such as clinical practice guidelines to reduce antibiotic use, might have contributed to the observed trend, 7-valent pneumococcal conjugate vaccine may play an important role in reducing the burden of acute otitis media, resulting in substantial savings in medical care costs.