Nine isolates of Klebsiella pneumoniae, obtained from one colonized and eight bacteraemic patients on a paediatric ward, were shown to be identical by PFGE, indicating an outbreak. Screening for extended-spectrum beta -lactamase (ESBL) production using the double-disc synergy test, Etest for ESBLs and agar diffusion tests indicated ESBL production. The isolates showed reduced susceptibility to cefotaxime but not to other third-generation cephalosporins. Molecular studies revealed production of TEM-1 and SHV-1 but no ESBLs were identified. Deficiency in expression of an outer membrane protein (OmpK35) was also observed. These observations led us to postulate that the extremely low level of OmpK35 expression and the co-existence of TEM-1 and SHV-1 resulted in an increased MIC of cefotaxime and the false designation of the isolates as ESBL producers. All the infected infants were treated with either third-generation cephalosporins alone or multiple antibiotics including a third-generation cephalosporin, and recovered and were discharged without sequelae.