Direct measurement of lung volume, i.e. functional residual capacity (FRC) has been recommended for monitoring during mechanical ventilation. Mostly due to technical reasons, FRC measurements have not become a routine monitoring tool, but promising techniques have been presented. We performed a literature search of studies with the key words 'functional residual capacity' or 'end expiratory lung volume' and summarize the physiology and patho-physiology of FRC measurements in ventilated patients, describe the existing techniques for bedside measurement, and provide an overview of the clinical questions that can be addressed using an FRC assessment. The wash-in or wash-out of a tracer gas in a multiple breath maneuver seems to be best applicable at bedside, and promising techniques for nitrogen or oxygen wash-in/wash-out with reasonable accuracy and repeatability have been presented. Studies in ventilated patients demonstrate that FRC can easily be measured at bedside during various clinical settings, including positive end-expiratory pressure optimization, endotracheal suctioning, prone position, and the weaning from mechanical ventilation. Alveolar derecruitment can easily be monitored and improvements of FRC without changes of the ventilatory setting could indicate alveolar recruitment. FRC seems to be insensitive to over-inflation of already inflated alveoli. Growing evidence suggests that FRC measurements, in combination with other parameters such as arterial oxygenation and respiratory compliance, could provide important information on the pulmonary situation in critically ill patients. Further studies are needed to define the exact role of FRC in monitoring and perhaps guiding mechanical ventilation.