This pilot study evaluated the potential effect of household environmental factors such as income, maternal characteristics, and indoor air pollution on children’s respiratory status in an Eastern Indonesian community. Household data were collected from cross-sectional (n = 461 participants) and preliminary childhood case-control surveys (pneumonia cases = 31 diagnosed within three months at a local health clinic; controls = 30). Particulate matter (PM2.5 and PM10) was measured in living rooms, kitchens, children’s bedrooms, and outside areas in close proximity once during the case-control household interviews (55 homes) and once per hour from 6 a.m. to midnight in 11 homes. The household survey showed that children were 1.98 times (p = 0.02) more likely to have coughing symptoms indicating respiratory infection, if mothers were not the primary caregivers. More children exhibited coughing if they were not exclusively breastfed (OR = 2.18; p = 0.06) or there was a possibility that their mothers were exposed to environmental tobacco smoke during pregnancy (OR = 2.05; p = 0.08). This study suggests that household incomes and mother’s education have an indirect effect on childhood pneumonia and respiratory illness. The concentrations of PM2.5 and PM10 ranged from 0.5 to 35.7 µg/m3 and 7.7 to 575.7 µg/m3, respectively, based on grab samples. PM was significantly different between the case and control groups (p < 0.01). The study also suggests that ambient air may dilute indoor pollution, but also introduces pollution into the home from the community environment. Effective intervention programs need to be developed that consider multiple direct and indirect risk factors to protect children.