In a prospective 5-year study of children with acute encephalitis, evidence of Mycoplasma pneumoniae infection was demonstrated in 50 (31%) of 159 children. In 11 (6.9%) of these patients, M. pneumoniae was determined to be the probable cause of encephalitis on the basis of its detection in cerebrospinal fluid (CSF) by polymerase chain reaction (PCR) or by positive results of serologic tests for M. pneumoniae and detection of the organism in the throat by PCR. CSF PCR positivity correlated with a shorter prodromal illness (P=.015) and lack of respiratory symptoms (P=.06). Long-term neurologic sequelae occurred in 64% of probable cases. Thirty children (18.9%) who were seropositive for M. pneumoniae but did not have the organism detected by culture or PCR had convincing evidence implicating other organisms as the cause of encephalitis, suggesting that current serologic assays for M. pneumoniae are not sufficiently specific to establish a diagnosis of M. pneumoniae encephalitis.