It was shown in dogs that intrapulmonary physiologic shunt (Qsp/Qt), arterial oxygen tension (PaO2), total static respiratory compliance (CT), oxygen delivery (O2AV), cardiac output (Qt), and arterial minus end-tidal carbon dioxide gradient (PaCO2-PetCO2) undergo statistically significant deterioration when oleic acid is injected into the pulmonary artery. Positive end-expiratory pressure (PEEP) therapy reduced Qsp/Qt and PaCO2-PetCO2 gradient and increased PaO2. The CT did not show any consistent pattern of improvement with the application of PEEP. The Qt and the O2AV progressively decreased as PEEP was increased. The application of additional PEEP beyond that which minimized the PaCO2-PetCO2 gradient produced a statistically significant increase in the PaCO2-PetCO2 gradient, but this was not reflected by concomitant changes in Qsp/Qt or PaO2 in spite of a further decrease in Qt. Thus, the PaCO2-PetCO2 gradient may be a more sensitive indicator of excessive PEEP than is Qst/Qt or PaO2, since it should be smallest when there is maximal recruitment of perfused or functional gas units without overdistention of alveolar areas contributing to dead space. Also, the use of the PaCO2-PetCO2 gradient permits the rapid titration of PEEP without the need for a pulmonary artery catheter.