Abstract Background Australian Aboriginal children experience a disproportionate burden of social and health disadvantage. Avoidable hospitalizations present a potentially modifiable health gap that can be targeted and monitored using population data. This study quantifies inequalities in pediatric avoidable hospitalizations between Australian Aboriginal and non-Aboriginal children. Methods This statewide population-based cohort study included 1 121 440 children born in New South Wales, Australia, between 1 July 2000 and 31 December 2012, including 35 609 Aboriginal children. Using linked hospital data from 1 July 2000 to 31 December 2013, we identified pediatric avoidable, ambulatory care sensitive and non-avoidable hospitalization rates for Aboriginal and non-Aboriginal children. Absolute and relative inequalities between Aboriginal and non-Aboriginal children were measured as rate differences and rate ratios, respectively. Individual-level covariates included age, sex, low birth weight and/or prematurity, and private health insurance/patient status. Area-level covariates included remoteness of residence and area socioeconomic disadvantage. Results There were 365 386 potentially avoidable hospitalizations observed over the study period, most commonly for respiratory and infectious conditions; Aboriginal children were admitted more frequently for all conditions. Avoidable hospitalization rates were 90.1/1000 person-years (95 % CI, 88.9–91.4) in Aboriginal children and 44.9/1000 person-years (44.8–45.1) in non-Aboriginal children (age and sex adjusted rate ratio = 1.7 (1.7–1.7)). Rate differences and rate ratios declined with age from 94/1000 person-years and 1.9, respectively, for children aged