Pulse oximetry is an important tool in evaluation and management of patients with cardiopulmonary disease. It provides an accurate, continuous, non-invasive measurement of oxygenation, however it has some limitations. Pseudohypoxemia is an artifactual condition that has been reported in patients with extreme leukocytosis and thrombocytosis. It should be suspected in patients with a discrepancy between oxygen saturation measured by pulse oximetry and that in arterial blood. High level of suspicion is needed to diagnose this condition as not doing so may lead to unnecessary escalation of therapy (i.e., increased levels of oxygen and mechanical ventilation). We provide a review of the principles and limitations of pulse oximetry and discuss the pathophysiology and diagnosis of pseudohypoxemia.