Objective To assess readmission rates identified by 3M-Potentially Preventable Readmissions software (3M-PPRs) in a national cohort of children's hospitals. Study design A total of 1 719 617 hospitalizations for 1 531 828 unique patients in 58 children's hospitals from 2009 to 2011 from the Children's Hospital Association Case-Mix Comparative database were examined. Main outcome measures included rates, diagnoses, and costs of potentially preventable readmissions (PPRs) and all-cause readmissions. Results The 7-, 15-, and 30-day rates by 3M-PPRs were 2.5%, 4.1%, and 6.2%, respectively. Corresponding all-cause readmission rates were 5.0%, 8.7%, and 13.3%. At 30 days, 60.6% of all-cause readmissions were considered nonpreventable by 3M-PPRs, more than one-half of which were related to malignancies. The percentage of readmissions rated as potentially preventable was similar at all 3 time intervals. Readmissions after chemotherapy, acute leukemia, and cystic fibrosis were all considered nonpreventable, and at least 80% of readmissions after index admissions for sickle cell crisis, bronchiolitis, ventricular shunt procedures, asthma, and appendectomy were designated potentially preventable. Total costs for all readmissions were $1.7 billion; PPRs accounted for 27.3% of these costs. The most costly readmissions were associated with ventricular shunt procedures ($26.5 million/year), seizures ($15.5 million/year), and sickle cell crisis ($15.0 million/year). Conclusions Rates of PPRs were significantly lower than all-cause readmission rates more than one-half of which were caused by exclusion of malignancies. Annual costs of PPRs, although significant in the aggregate, appear to represent a much smaller cost-savings opportunity for children than for adults. Our study may help guide children's hospitals to focus readmission reduction strategies on areas where the financial vulnerability is greatest based on 3M-PPRs.