The Influenza Complications Alert Network (FluCAN) is a sentinel hospital-based surveillance programme operating in all states and territories in Australia. We summarise the epidemiology of children hospitalised with laboratory-confirmed influenza in 2014 and reports on the effectiveness of inactivated trivalent inactivated vaccine (TIV) in children. In this observational study, cases were defined as children admitted with acute respiratory illness (ARI) with influenza confirmed by PCR. Controls were hospitalised children with ARI testing negative for influenza. Vaccine effectiveness (VE) was estimated as 1 minus the odds ratio of vaccination in influenza positive cases compared with test-negative controls using conditional logistic regression models. From April until October 2014, 402 children were admitted with PCR-confirmed influenza. Of these, 28% were aged < 1 year, 16% were Indigenous, and 39% had underlying conditions predisposing to severe influenza. Influenza A was detected in 90% of cases of influenza; influenza A(H1N1)pdm09 was the most frequent subtype (109/141 of subtyped cases) followed by A(H3N2) (32/141). Only 15% of children with influenza received antiviral therapy. The adjusted VE of one or more doses of TIV for preventing hospitalised influenza was estimated at 55.5% (95% confidence intervals (CI): 11.6-77.6%). Effectiveness against influenza A(H1N1)pdm09 was high (91.6% , 95% CI: 36.0-98.9%) yet appeared poor against H3N2. In summary, the 2014 southern hemisphere TIV was moderately effective against severe influenza in children. Significant VE was observed against influenza A(H1N1)pdm09.