Profound transient nocturnal hypoxemia is common during REM sleep in "blue bloaters" with chronic obstructive lung disease, these patients having hypoxemia and CO2 retention when awake, when breathing air. These hypoxemic episodes appear to be due to a combination of reduced ventilation in REM sleep with a possible increase in the maldistribution of ventilation to perfusion within the alveoli at that time, and a reduction in functional residual capacity. The episodes are associated with exacerbations of pulmonary vasoconstriction, which can be reversed by oxygen therapy throughout sleep. Cardiac arrhythmias and alterations in ST segments are also found in these patients during sleep when breathing air. It is probable that the severity of hypoxemia in REM sleep can be predicted from knowledge of the arterial PO2 when breathing air when awake in patients with COPD. If so, expensive sleep studies are not essential to indicate the presence of hypoxemia in sleep in these patients, but such studies may be required in obese patients, in those who snore, or those who complain of headache following nocturnal oxygen therapy to demonstrate the presence of the overlap syndrome, in which obstructive sleep apnea is combined with chronic obstructive lung disease in the same patient. Nocturnal oxygen therapy may be dangerous in such patients with the overlap syndrome but appears to cause little rise in PCO2, in patients with COPD and REM-associated hypoxemia alone. Hypoxemia and sleep quality can probably be improved by oxygen therapy in "blue bloaters," and this treatment can also reverse pulmonary hypertension in REM sleep. The new ventilatory stimulant almitrine can also correct hypoxemia, without disturbing sleep quality, but the effects of this drug on pulmonary vasoconstriction during REM sleep are as yet unknown.