This study assessed the relationship between hematocrit levels and severity of obstructive sleep apnea (OSA) and examined how this relationship was affected by the degree of hypoxia as well as by possible confounding factors. Two-hundred sixty three subjects (189 men and 74 women) underwent nocturnal polysomnography with oximetry and had measurements of hematocrit, hemoglobin, white blood cell count, body mass index (BMI), blood pressure (BP), and 24-h urine norepinephrine (NE). Patients with severe OSA [respiratory disturbance index (RDI) >30] had significantly higher hematocrit values than patients with mild to moderate OSA or nonapneic controls (p < 0.01). However, only one patient had a hematocrit in the range of clinical polycythemia. Hematocrit levels were significantly correlated with BMI, BP, urinary NE, RDI, percent of time spent at oxygen saturation <90%, and with mean oxygen saturation. Multiple linear regression analysis revealed that mean oxygen saturation, RDI, and percent of time spent at oxygen saturation <90% were significant predictors of hematocrit level, even after controlling for gender, ethnicity, 24-h urine NE, BMI, and BP (p < 0.05). The severity of OSA is significantly associated with increased hematocrit, even after controlling for possible confounding variables. However, nocturnal hypoxemia in OSA does not usually lead to clinical polycythemia.